Govt blamed for RI's poor car technology

JAKARTA (JP): The Indonesian Automotive Industry Association, which groups mostly Japanese vehicle manufacturers, yesterday blamed the government for not giving enough chances to existing assemblers to develop locally-designed sedans.

Speaking at a hearing of the House of Representatives' technology and education commission, the association's chairman, Herman Z. Latief, said the existing automotive rulings issued by the government do not give enough room for automobile assemblers to master auto manufacturing technology.

"This situation does not satisfy all parties, including auto assemblers themselves. However, it occurs in the current auto policy framework," Herman said.

Herman added that the government's auto policy could not drive the existing auto assemblers to master passenger car manufacturing technology because the government had wanted to encourage auto assemblers to develop commercial car technology.

"People have pointed their fingers at us, and told us what our faults are. But we have abided by the government's rulings," Herman was quoted by Antara as saying.

Herman's remarks were responding to criticism that existing vehicle assemblers are failing to develop full automobile manufacturing technology despite more than 20 years of operations.

Debate

The debate over auto manufacturing technology emerged after the government decided in February to extend tariff and tax incentives to PT Timor Putra Nasional to develop a national car.

Timor Putra, controlled by President Soeharto's youngest son Hutomo Mandala Putra, has teamed up with Kia Motors Corp. of South Korea to develop the national car, to be called Timor.

Meanwhile, an official at the Investment Coordinating Board revealed yesterday that 53 car vendors from South Korea have expressed their readiness to relocate their manufacturing facilities to Indonesia to support the national car program.

The board's deputy chairman for promotion, Sugihono Kadarisman, said that delegates from 30 South Korean vendors will come here next month to sound out investment possibilities.

"Their planned visit here shows their commitment to helping realize Indonesia's national car program," Sugihono told journalists at his office when explaining the results of Indonesia's recent investment mission to South Korea and Hong Kong, from May 20 to May 24.

Mission

The mission was led by State Minister of Investment Sanyoto Sastrowardoyo.

On behalf of Timor Putra, Kadarisman said the company will provide an industrial estate adjacent to its current assembly plant in Cikampek, West Java, at a competitive price for the vendors from South Korea.

He added that Timor Putra will both assist the vendors in acquiring the necessary licenses and promise to buy their products for at least five years.

"If Timor Putra cannot absorb all their products, it will help them export the remainder," Kadarisman said, adding that Kia had promised to buy 50 percent of the components produced by the relocated vendors.

"This is win-win cooperation, in which Indonesia can realize its national car and Kia can improve its global competitiveness by relocating its component manufacturing facilities here," Kadarisman said.

He added that the 53 vendors will help Timor Putra meet the government's requirements on local content, at least for the first year of operations.

The government has stipulated that the national car must have local components of 20 percent by the end of the first year, 40 percent by the end of the second year and 60 percent by the end of the third year.

He added that the 53 vendors are expected to manufacture 59 groups of components, including batteries, tires, mufflers, tool- sets, air conditioners, seat belts, jacks, air-filters and alternators.

In the second year, Timor Putra will need 83 component groups to be built locally to meet the 40 percent local content in the Timor car. It will need 59 vendors.

In the third year, Timor Putra will need 99 groups of components to be built locally to meet the 60 percent local content requirement. By that time, it will need 65 vendors.

Kia's chairman Kim Sun-hong was reported as saying in Seoul earlier this month that Kia will train 1,000 people to be employed by Timor Putra by the end of the year.

Yong Kun-chong, an adviser at Kia, noted that the company would ship 4,000 semi-knocked-down sedans to Timor Putra every month, starting next month, until its joint venture assembly plant in Cikampek, West Java, is ready to start production in 1998.

A director of Timor Putra, Suparto Soejatmo, said the company had already received orders for 33,000 Timor cars. The vehicle will be sold for Rp 35 million (US$15,570), half the price of Japanese cars here.

However Minister of Industry and Trade Tunky Ariwibowo said the government had not given approval to Timor Putra to import semi-assembled sedans from Kia, and added that his office is still studying the former's progress report and proposal. (rid)