General Motors keen on Indonesia again

General Motors keen on Indonesia again

SINGAPORE (Reuters): General Motors (GM) said yesterday it was ready to make new investments in Indonesia now President Soeharto had removed tax exemptions on Jakarta's national car project.

The removal of the exemptions, part of a far-reaching agreement with the International Monetary Fund (IMF) in return for a $43 billion rescue package, "changes the competitive environment dramatically," GM said in a statement.

The announcement "changes our attitude toward investment in Indonesia", said the statement from Donald T. Sullivan, president of General Motors Asian and Pacific Operations.

"With the government's announcement that the national car program is being rescinded, we now stand ready to...make further investments, including the introduction of new products, as market conditions become more favorable," he said.

Sullivan gave no further details.

The statement said GM had bought out its Indonesia joint venture partner, PT Garmak Motors, which held a 40-percent stake in General Motors Buana Indonesia (GMBI), earlier this week.

Garmak Motors is controlled by Probosutedjo, Soeharto's half- brother.

GMBI assembles and sells the Opel Blazer, a four-wheel drive sports vehicle. It is not in direct competition to the Timor national car, a sedan, but GM has said previously the national car policy had affected its expansion plans.

Sullivan said Indonesia needed to introduce further reforms.

"To attract more auto-related investment to Indonesia and to meet its tremendous growth potential, the government can further demonstrate its leadership by encouraging further trade liberalization," he said.

"It is in Indonesia's best interests to attract world class automotive companies and suppliers and that requires open markets," he said.

Indonesia's national car project had drawn the ire of U.S. and Japanese car makers who said it put them at a considerable disadvantage.