GMBI buys out Garmak Motor from Probosutedjo

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)