Ford decides not to return to RI until car row settled
Ford decides not to return to RI until car row settled
NEW YORK (AP): Ford Motor Co. will not resume efforts to build
cars in Indonesia until preferential treatment to a "national"
car producer in the country ends, Ford's vice chairman for
emerging markets said.
"One country where the risks are higher than what we want is
Indonesia," Vice Chairman W. Wayne Booker said Monday.
"The situation in Indonesia is very murky. The present
regulations in the auto industry are clearly in violation of the
World Trade Organization," Booker told a group of journalists at
a dinner meeting. "We will not make an investment until this
situation is cleared up."
American, Japanese and European automakers have strongly
protested in the WTO, or World Trade Organization, the exclusive
tax breaks extended to the company partly owned by President
Soeharto's youngest son that is developing Indonesia's first
"national car."
The government granted Tommy Soeharto's PT Timor Putra
Nasional firm a three-year exemption from hefty luxury and import
taxes that can double the price of a car. The firm, a joint
venture with KIA Motors Co. of South Korea, is also using its
exemptions to import cars from South Korea for one year while it
completes factories in Indonesia.
"We won't go to Indonesia because of that. It's an unlevel
playing field," said Booker, Ford's top official for Asia, Latin
America and Africa.
Booker confirmed that Ford had been negotiating with Tommy
Soeharto to invest in a plant in Indonesia to manufacture up to
50,000 passenger cars and trucks a year.
"What's important with Asians is long-term relationships,"
Booker said. "All Asian players know that Ford never participates
in corruption. We won't 'buy' anything."
Booker said he has discussed the situation with top executives
of KIA, of which Ford owns 10 percent, but did not give details.
Elsewhere in Asia, Ford expects to make money in the crowded
Vietnamese market -- at present only 20,000 vehicles a year -- even
though 15 foreign automakers have won approval to produce there.
"We are going to be profitable in Vietnam," Booker said.
"We've sized our investment to the market. We don't need to be
dominant to make money. Our investment isn't highly automated,
it's labor intensive with flexible plant integration for a low
break-even point."
Ford will produce 5,000 Transit vans and Trader delivery
trucks annually within three years at its plant near Hanoi,
Booker said. He did not give expected profits from the venture
but said most sales would be to truck fleets and to state-owned
and private businesses.