Govt tells Timor to pay dues or face liquidation

Govt tells Timor to pay dues or face liquidation

JAKARTA (JP): The government has sent a stern letter to the
controversial car company PT Timor Putra Nasional, warning it to
settle Rp 3.09 trillion (US$343 million) in backdated import
duties immediately or face liquidation.

The newly installed Director General of Customs and Excise
Permana Agung Drajattun said on Friday that under Law No.19/1997
on tax collection, the Directorate General of Customs and Excise
and the Directorate General of Taxation have the right to
confiscate Timor's assets if it fails to pay its dues within 21
days of the warning letter being issued.

"We have sent the warning letter and they now have 21 days,"
he told reporters following a ceremony to mark his appointment.

Permana served as director of planning and revenues in the
Directorate General of Customs and Excise before assuming his
current position.

Under Law No. 19, Timor should be given 37 days to settle its
dues after being served with a letter stating the amount of
unpaid duties. The company is also entitled to a further 21 days
after receiving a second and final warning letter. Thereafter it
is liable to have its assets are confiscated.

Permana did not say when the warning letter had been sent, but
in an interview last month, Permana revealed that Timor had
missed the first deadline on Dec.18.

"But Timor also has the right to raise objections," Permana
said.

PT Timor Putra is controlled by former president Soeharto's
youngest son Hutomo Mandala Putra.

In 1996, Soeharto granted the company special exemption from
import duties and value added tax to develop the Timor, which was
to become the national car.

The exemptions were given on condition that Timor set up an
assembly plant in Indonesia in the second year of operation and
gradually increased its use of locally-manufactured components.

The company failed to fulfill the terms of the agreement and
is now required to pay backdated tax and import duties on the
40,960 cars it has so far imported from South Korea's Kia Motors.

Timor also owes hundreds of millions of dollars in loans to a
consortium of 16 private and state banks.

Pressure for the government to recover unpaid taxes from Timor
has intensified since Soeharto fell from power and the political
connections which led to the award of the exemptions became less
effective.

Separately, Director General of Taxation Effendi Ritonga said
on Friday that his office would issue a statement detailing
Timor's tax arrears to the state.

He said the company would be given 37 days to pay its dues
after the statement had been sent, and a further 21 days after a
warning letter had been issued before facing penalties.

Minister of Industry and Trade Rahardi Ramelan said recently
that the government was determined to revive the now defunct
national car program as part of the country's automotive policy.
He said that Timor would be considered for inclusion in the new
program.

"We are looking at several companies which have developed
their own automobile brands," he told reporters. (rei)