GM reaffirms long-term commitment to RI

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)