Central bank to speed up Timor car loans

JAKARTA (JP): Bank Indonesia (BI), the central bank, has promised to speed up credit financing procedures for national car manufacturer PT Timor Putra Nasional.

BI director for credit, Muchlis Rasyid, said yesterday loan financing procedures for Timor Putra would be expedited because none of the 13 state and privately-owned banks that had pledged to support the construction of Timor Putra's manufacturing facility had started disbursing their loans.

The consortium of 13 banks, led by state-owned Bank Dagang Negara, was asked by the government in May to lend US$1.3 billion to Timor Putra for the construction of its manufacturing facility in Krawang, West Java.

Foreign banks canceled their credit commitments to Timor Putra due to international disputes over the national car policy.

Muchlis was quoted by Antara as saying that members of the consortium were still discussing the issue. They needed time to study Timor Putra's proposal, he said.

Antara quoted a source at Timor Putra as saying that company executives were having intensive discussions with the 13 banks. The source said Timor Putra expected the loans to be dispersed by the middle of this month.

Muchlis said consortium members needed time to calculate the exact amount of funding Timor Putra needed and when the loans would mature.

"Both sides have to agree on whether the amount proposed by Timor Putra is acceptable," he said.

He said the banks had their own way to calculate the sum and analyze the issue. "And there may be differences in calculating interest rates, the amount of loans and the maturity date," he said.

Muchlis said BI would help, "but only by following legal procedures".

He said the 13 banks had no "serious problems", the loans could be dispersed in the near future.

The government in February last year granted import duty and luxury tax exemptions to Timor Putra as the sole producer of a so-called national car, driving its cost down 60 percent over other cars in Indonesia.

Timor Putra -- controlled by President Soeharto's youngest son, Hutomo Mandala Putra -- is cooperating with South Korea's Kia Motors Corp to produce the national car.

It is importing Timor sedans fully-assembled from South Korea because its production facilities are still being built.

Shortly after the consortium was set up, Coordinating Minister for Economy and Finance Saleh Afiff said the government would slash the amount of the requested loan because of Timor's questionable sales targets.

Afiff said Timor's projected sales of 200,000 sedans by 1999 was an overestimation as the country's best-selling vehicle -- Toyota's Kijang van -- sold just 70,000 cars a year.

Hutomo Mandala confirmed that his company needed $1.3 billion to develop its manufacturing plant.

But he said the company would raise only $690 million from domestic banks while the remaining $610 million would come from its own equity, operational profits and its planned initial public offering next year.

Most consortium members have responded cautiously to the issue, saying they need more time to consider the proposal.

They said that, like property projects, automotive projects were sensitive because both were consumer goods.

Others said no bank would extend credit to big projects without assessing feasibility studies and getting a guarantee or collateral.

Minister of Finance Mar'ie Muhammad had said in May that the government would not guarantee Timor Putra Nasional's bank loans. (pwn)