GM reaffirms long-term commitment to RI

JAKARTA (JP): PT General Motors Buana Indonesia says it will maintain its long-term commitment to Indonesia despite its decision to delay further local investment here because of recent national car policy.

General Motors Buana's president, William S. Botwick, said in a statement yesterday that the company's long-term local operations would not be affected by its decision to delay new investment in Indonesia until the affects of Indonesia's national car policy could be assessed.

"There is a great deal of uncertainty in the Indonesian automotive industry at the moment. The national car policy has resulted in discriminatory benefits for one car maker, which may well impact on General Motors' future strategy in Indonesia," his statement said.

General Motors Buana is the sole agent and distributor in Indonesia for the United States-based automobile manufacturer General Motors (GM).

The company is controlled by President Soeharto's half- brother, Probosutedjo. It is one of several local car assemblers that have expressed interest in developing automobiles under the "national car program".

Botwick said that while GM was "disappointed" that Indonesia no longer had a "level playing field", it had no intention of withdrawing its Indonesian operations.

"Until we get a better understanding of where the Indonesian government is heading with its national car policy, we cannot finalize our long-term investment strategy," he said.

GM has spent US$110 million refitting its manufacturing plant in Bekasi, West Java.

In 1993, it bought 60 percent of Garmak Motors, the former distributor and manufacturer of Opel cars, and invested a large amount to develop a right-hand-drive Opel Blazer.

The Blazer originates from the United States. Local components comprise up to 40 percent of the car, with components from some 55 Indonesian suppliers.

In a separate development, Minister of Industry and Trade Tunky Ariwibowo acknowledged that he had received many questions on national car policy during his visit to the United States.

He was quoted by Antara yesterday as saying that he had explained the policy's goal and background to American businessmen, officials and congressmen in Washington.

The government's national car program will give tax breaks -- including exemptions from import duties and luxury taxes -- to a manufacturer if its cars' local components reach 20 percent by the end of the program's first year, 40 percent by the end of the second year and 60 percent by the end of the third year.

Government has decided to award national car status to only one car, the "Timor" sedan which will be manufactured by PT Timor Putra National in collaboration with South Korea's Kia Motors Corp.

Since this decision, the government has allowed Timor Putra, which is controlled by President Soeharto's youngest son Hutomo "Tommy" Mandala Putra, to import completely assembled cars in its first year of operations.

Japan, the European Commission and the United States have all criticized the national car program saying it violates the rules of the World Trade Organization.

GM's Asian and Pacific Operations chief, Donald Sullivan, said earlier this month that the company has decided to suspend additional development in Indonesia because of the discriminatory privileges given by the national car program. (pwn)