Ford Motor set to return to Indonesia, official says

Ford Motor set to return to Indonesia, official says

SINGAPORE (Reuters): Ford Motor Company is on its way back to Indonesia after shifting its US$100 million project to the Philippines on protest to its national car policy, a company executive said on Wednesday.

"With the changes going on in Indonesia, and the fact that the national car program is no longer (there), Ford will return to Indonesia," Gerald Kania, director of Asia Pacific operations, told reporters.

Kania said the return to Indonesia was part of Ford's Asia strategy to obtain a 10 percent market share in the region in a 10-year time horizon.

"We have a very aggressive growth strategy in the company, a very aggressive brand strategy, the most aggressive growth strategy in the region because we recognize that ... the second biggest automobile company is to improve our position," he said.

"We have to be successful in Asia."

Ford canceled its investment plan in Indonesia after the government introduced a national car program in 1996.

It was designed to give a special tax break to PT Timor Putra Nasional, a firm controlled by former President Soeharto's son, to import sedans from Kia Motor of South Korea.

Timor later was ordered to pay backdated import duties which were exempted previously by the Soeharto government.

"We will be back in Indonesia probably sooner than later," Kania said, adding that Ford would build up its operations in Indonesia step-by-step, starting from the logistics side.

"In the last couple of weeks we talk to Indomobil and some other groups," he said. Indomobil Sukses International, controlled by the Indonesian Salim group, is a car assembler, including for Mazda and Volvo.

Ford has a controlling 33.4 percent stake in Mazda Motor Corp and has recently acquired Volvo Car Holding Corp.

Kania said Ford was not looking to add new capacity to the battered Indonesian car market due to economic crisis, but would instead look for existing capacity.

Indonesia's Minister of Industry and Trade Rahardi Ramelan had said earlier Ford was looking to make big investments in the country, but denied reports it was taking over Timor.

Ramelan said Timor could be taken over and converted into a state firm if it could not settle its debt with the government. Kania said the 10 percent target remained despite the prolonged Asian economic crisis. "Today, we participate (with) very small percentage and our objective over the next few years is to become a much bigger factor in Asia," he said.

"Asia in the next five years, even with the downturn, will represent 15 to 16 million units of sales," Kania said.

"We look at Asia as an opportunity."