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program is being rescinded, we now stand ready to...make further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.