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)