Foreign companies to make car parts here
JAKARTA (JP): As many as 53 companies from South Korea and 22 from Taiwan plan to establish factories in Indonesia to produce automotive components, says Minister of Investment Sanyoto Sastrowardoyo.
Sanyoto, who is also chairman of the Investment Coordinating Board, said yesterday that the intentions expressed by the 75 foreign companies reflect the promising prospect of Indonesia's automotive industry.
"We hope those companies will soon submit their investment applications," he told a hearing with Commission VI, for investment and industry, of the House of Representatives.
The minister said the companies would sell their products both on the domestic and international markets,
Sugihono Kadarisman, a deputy chairman of the investment board, said that the intention of the Korean and Taiwanese companies to establish production plants in Indonesia was made following the introduction of the country's new car policy in February.
"The investment projects of the Korean car component companies will be coordinated by Korea's Kia Motors," he said during the break in the hearing.
Kia Motors has established links with PT Timor Putra Nasional, a company controlled by President Soeharto's youngest son Hutomo Mandala Putra, which has received exclusive rights from the government to develop the so-called "national" car.
Timor Putra has been granted pioneer status, enabling it to receive a series of tax breaks, including the exemption of import duties and luxury sales taxes.
The "national" car, which will use Timor as its brandname, will be imported from Kia Motors until Timor Putra's assembly facilities are ready next year.
Sugihono said that Kia Motors, as the coordinator of the Korean companies, pledged to import part of its production if its local partner could not absorb all of their Indonesian-made car components.
At least 50 Korean-made Timor cars are now on display at shopping malls in Jakarta, carrying a price tag of Rp 35.75 million (US$15,235), far lower than the Rp 65 million for Japanese cars of the same class.
Hutomo, more popularly called Tommy, said Monday that his company, which had so far received orders for around 33,000 Timor cars, would formally begin deliveries in October.
He said that Timor Putra, which will receive the exclusive tax facilities for three years, expects to sell around 70,000 cars next year.
Opposition
International automotive companies, notably those from Japan and the United States, have strongly opposed the special treatment given to Timor Putra, saying that the government's national car policy breaks the World Trade Organization's free trade principles.
Bimantara -- owned by Bambang Trihatmodjo, Tommy's elder brother and also a local partner of Korea's Hyundai Motor Company -- also criticized the exclusive rights given to Timor Putra.
Bimantara also applied for pioneer status to develop its own national car project but the request was turned down.
Minister of Industry and Trade Tunky Ariwibowo has repeatedly defended the exclusive treatment given to Timor Putra, saying that similar facilities will be issued only after Timor Putra has shown a satisfactory achievement.
Sanyoto told the hearing yesterday that Timor Putra, which is now constructing an assembly plant in Cikampek, West Java, would invest at least Rp 475.8 billion in developing the "national" car project.
The country's national car policy has lured more investors to enter the car component industry despite the opposition, he said.
Apart from the intentions expressed by the 75 Korean and Taiwanese companies, his office approved 29 new investment projects in the automotive component industry in the January-June period, Sanyoto said.
Out of the approved projects, 22 will have a combined investment value of around 916.61 million and will be run by foreign companies, while the remaining seven projects, with total investments of Rp 33.6 billion will be carried out by domestic investors, he added. (hen)