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.