Govt offices to be obliged to buy Timor cars

JAKARTA (JP): Minister of Industry and Trade Tunky Ariwibowo hinted yesterday that government offices and state firms would soon have to buy Timor sedans to prop up the national car's slumping sales.

Tunky said compulsory purchases were needed to help the car's sales reach the target.

"The government has money to spend. And, naturally, it is in the government's interest to use that money for priority programs, particularly a national program," he said.

He said all Indonesians should support the program because it was in the nation's interest.

"Besides, the product we suggest should be bought is good," he said.

Tunky said he was convinced the World Trade Organization (WTO) would not object to the measure, which has a clause requiring government procurements to be conducted on an open, competitive- bid basis.

"We are not a charter member of the Government Procurement Agreement. We have our own policies on how to spend our money in line with our national interests," he said.

The government would not set any targets for Timor sedan procurements by government offices, Tunky said. He said details on the appointment of Timor sedans for government car purchases would be announced soon.

He refused to elaborate on when the policy would take effect.

"What's important to me is that the product is sold and the national program runs well. That's my responsibility.

"So don't be surprised if you see me driving that car to work," he said.

Earlier this month, Japan and the European Union took action to pave the way for the early creation of a dispute settlement panel at the WTO over Indonesia's national car policy.

Japan filed a request Friday with the WTO Dispute Settlement Body (DSB), seeking to convene an extraordinary meeting on June 12 to set up such a panel.

The EU made a similar notification to the DSB on Thursday.

Under WTO rules, if a complainant country fails to reach an accord through bilateral talks and requests that a settlement panel be set up, such a request can be blocked only once and shall be met when the complainant submits it for the second time regardless of the defendant country's response.

Japan made its first request for a panel at a regular DSB meeting in April, and the EU made the same request at another regular meeting on May 23. Indonesia rejected both requests.

Japan, the EU and the United States lodged a complaint with the WTO over Indonesia's national car policy last October, claiming it discriminated against foreign competitors.

Tunky said yesterday that despite the tight deadline, he would continue to seek bilateral solutions to the dispute.

"We will still try to block it from the panel," he said.

The national car policy provides domestically owned automakers with tariff and luxury sales tax exemptions on the condition that they raise the local content to 60 percent in three years.

Only a joint venture between PT Timor Putra Nasional, headed by Hutomo Mandala Putra, President Soeharto's youngest son, and South Korea's Kia Motors, has qualified for the program until 1999. The national car, which is currently manufactured in South Korea, is branded Timor for the Indonesian market.

Reports in February said Timor's sales had collapsed after it had enjoyed a favorable market since it was first sold on the domestic market in October 1996.

The car's distributor, PT Timor Distributor Nasional, claimed it had managed to control more than 25 percent of the market since October. But February figures spoke differently.

The company had expected to sell more than 3,000 cars in February but, according to statistics released by PT Astra International, it managed to sell only 962. This was down from 3,259 in January.

Timor Distributor in a statement yesterday said its Timor S- 515 sedans which were allocated for fleet sales -- or sales in large volumes -- to private companies, government offices and state firms would make up only a "very small percentage" of the car's total sales.

"Fleet sales make up only 5 to 6 percent of the total. The largest proportion comes from retail sales through the 78 distribution networks across the country," the company said. (pwn)