Govt not to grant incentives for Bimantara cars

Govt not to grant incentives for Bimantara cars

JAKARTA (JP): Minister of Industry and Trade Tunky Ariwibowo
has again rejected PT Bimantara Citra's request for tax and
tariff incentives for its newest cars.

He reaffirmed that such tax and tariff facilities would be
given to only one firm, PT Timor Putra Nasional, for the next
three years. Timor Putra, controlled by President Soeharto's
youngest son Hutomo Mandala Putra, is developing a national car,
called Timor.

"If other companies want to [develop national cars], they are
welcome to do so. But the problem for the government is that it
can only afford to give such incentives to one company at a
time," Tunky told journalists at his office yesterday.

Bimantara Citra, controlled by Soeharto's second son Bambang
Trihatmodjo, plans to launch two sedans, with 1,500 cc and 1,600
cc engines, in July with the Indonesian names Bimantara Cakra and
Bimantara Nenggala respectively.

Both cars are the Indonesian versions of the Hyundai Accent
and Hyundai Elantra, developed by the Hyundai Motor Company of
South Korea.

Tunky confirmed that his office had extended brand licenses to
Bimantara's automotive arm, PT Bimantara Cakra Nusa, for both
types of cars.

"Only brand, nothing to do with facilities," Tunky noted. "As
I said, the facilities will be given to only one firm, Timor
Putra, for the next three years."

Timor Putra is teaming up with Kia Motors Corp. of South Korea
to develop the 1,500 cc Timor sedan.

The company said earlier that Timor cars, partly-assembled in
South Korea by Kia, will start arriving in Indonesia this month.
Four thousand units will be imported every month until the
scheduled completion of Timor Putra's manufacturing plant in
1998.

Tunky said what makes Timor Putra different from other auto
companies is that it is developing the auto technology with its
own engineering and design.

The Indonesian partner, Timor Putra, will be the principal
company for Timor cars. It will not be the case with Bimantara
because Hyundai will remain the principal company for its
Bimantara cars.

The national car program has focused international attention
on the Indonesian automobile market, which has been dominated by
Japanese makes for many years.

Automakers in Japan and the United States have threatened to
take Indonesia to the World Trade Organization over the policy,
which they believe has breached free market principles laid down
by the organization.

Domestically, the policy has also sparked protests from local
auto assemblers. They have complained that the policy would
disrupt the local auto market as the people will adopt a wait and
see strategy when buying cars.

In response to the national car program, the largest auto car
assembler PT Astra International plans to produce "cheap" sedans
in the near future.

"It's a good idea...as long as they do not ask for
facilities," Tunky said. (rid)