Govt not ready to appeal to WTO on Timor car case
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)