GMBI buys out Garmak Motor from Probosutedjo

JAKARTA (JP): General Motors Buana Indonesia (GMBI), the local branch of American auto giant General Motors (GM), confirmed yesterday that it had bought out its Indonesian partner, Garmak Motor, owned by President's Soeharto's half-brother Probosutedjo.

GMBI president director William S. Botwick told reporters at a breaking of the fast gathering last night that the acquisition of Garmak Motor's 40 percent stake in GMBI was completed last September following two years of negotiations.

"GMBI is now 100 percent owned by General Motors Corp," he said. "It demonstrates our confidence in the market and that the market will grow in the future."

He declined to mentioned how much GM had paid for the shares, saying both sides had agreed to keep that confidential.

A company statement said: "The buyout represents an additional investment by GM above current investment levels."

This breaks a promise made by Botwick in 1996 that GM would not invest further in Indonesia until the National Car project had been resolved. The scheme gives tax breaks to PT Timor Putra Nasional, an automotive manufacturer controlled by Soeharto's youngest son Hutomo Mandala Putra.

It is currently being challenged by the European Union, Japan and the United States at the World Trade Organization (WTO).

Botwick denied he was going back on his promise. "Under the terms of the International Monetary Fund deal, Indonesia has agreed to abide by the WTO decision. And I have been told that the WTO is likely to rule against Indonesia," he said.

"Anyway, the market seems to be resolving the issue faster than the WTO."

Botwick also refuted rumors that GMBI had laid off some of its workers. "We have not laid off any employees and indeed we are signing a new collective agreement with them next week. We have good relations with the union and the employees."

However, he refused to rule out job losses in the months to come. "It is a very difficult time for everyone in the industry at the moment and I can't give any guarantees about the future."

He admitted there had been some "short days" at GMBI's production plant recently but that demand had picked up again in the last few days.

Marketing director Terence Johnson said: "It seems there has been a rush on food and cars in the last few days. If it continues we will not be laying off workers but adding a third shift."

He confirmed that prices would be rising next week, but would not say when or by how much. "We are watching the market day by day to see what is happening. Any rise will be commensurate with market conditions."

GMBI, an affiliate of GM's European arm Opel, currently sells Opel Blazer sport-utility vehicles (SUV) and Optima sedans in Indonesia.

Botwick announced last night that in 1997, Blazers became the most popular SUV in Indonesia, with 36 percent of the market. He also said the 1998 Blazer, recently unveiled at the Detroit Auto Show, would go on sale here in March. (jea)