Car makers should take aircraft cue

Car makers should take aircraft cue

JAKARTA (JP): State Minister for Research and Technology B. J. Habibie said yesterday that the development of the automotive industry should follow the path of the aircraft industry.

"Indonesia will be able to build its own automotive industry if its development follows the example of the aircraft industry," Habibie told journalists before attending a limited cabinet meeting on economy.

Habibie, also president of the state-owned aircraft manufacturing company, explained that the development of the aircraft industry in Indonesia focuses on the designing of a product while the components can be made elsewhere.

He said that if the automotive industry also focuses on designing only, while the engines and components are obtained from various suppliers, automotive producers will be able to free themselves from their principal companies.

"However, if it (focusing on designing) is started now it might be difficult," Habibie said, adding that the dependency level of local automobile assemblers on their overseas principals is still strong.

When asked on the protection given to the automotive industry, Habibie said such protection is needed at the initial stage but if not reduced, it will hamper its development in the long run.

The government has given protection to the automotive industry since the middle 1970s. Analysts claim that the protection has been misused by car assemblers, which have used the huge profits gained from selling their products, at far above their real prices, to expand their businesses into other sectors.

Director General of Metal, Machinery and Electronic Industries Effendi Sudarsono said last month that starting this year, the government will gradually lower the levels of import tariffs on automotive products.

The government presently imposes a 175 percent import duty on sedans and station wagons not assembled in Indonesia. On top of the duty, imported assembled vehicles are also subject to a 100 percent surcharge.

Slow

Habibie also said that the development of the automotive industry has been slow because there are too many brands developed in the country. In the 1970s, he said, Indonesia had more than 60 brands.

"Consequently, no single company could grow very quickly," Habibie said, adding that, as a comparison, the United States and Germany develop only four brands, while South Korea develops only three brands.

Concurring Habibie's argument, Minister of Industry Tunky Ariwibowo told journalists at his office yesterday that 26 brands are now operating inefficiently.

However, he said that his ministry will not issue a regulation to reduce the number of brands. "If I issue a regulation to limit the brands, it contradicts our general policy as we are in the era of deregulation, not regulation," he said. (rid)