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)