Govt not ready to appeal to WTO on Timor car case

JAKARTA (JP): Indonesia has yet to decide whether to appeal against the World Trade Organization's (WTO) finding that the country's national car project violated international trade rules.

Minister of Trade and Industry Mohamad "Bob" Hasan said yesterday the government planned to study the potential impact before deciding what steps to take regarding the WTO decision.

"We are going to evaluate the advantages and disadvantages first before we decide to appeal, because we don't want to spend too much money on legal fees if we are going to lose anyway," Hasan told reporters.

He said he had not received complete reports from the government's representative at the WTO.

The WTO officially ruled last week that Indonesia's policies which exempt PT Timor Putra Nasional, maker of the national car, from import duty and luxury sales taxes discriminate against other carmakers in the country.

The decision came three months after the government removed its Timor's tax breaks, as part of the deal to receive the US$43 billion bailout brokered by the International Monetary Fund (IMF).

Automotive analyst Suhari Sargo has said that the decision was basically immaterial to PT Timor as its tax privileges had already been scrapped.

He said it was less than likely that the country would appeal.

Under a presidential decree issued in 1996, companies which are fully Indonesian-owned and use Indonesian trademarks and technology in vehicle production could import auto parts tariff- free.

They could also sell these "national cars" exempt of luxury taxes.

Timor, controlled by President Soeharto's youngest son Hutomo Mandala Putra, was the only company which qualified for the privileges.

It was authorized to import up to 45,000 cars from South Korea's KIA Motors before its own car factory started production.

It is estimated that there are still about 15,000 Timor cars in stock. It will be months, if not years, before all these are sold considering that only 4,000 vehicles were sold in Indonesia last month.

The unsold cars still reportedly receive tax facilities from the government, even though the company has officially lost the privileges. (das)