Govt to lobby Japan, U.S. and EU over Timor car disputes

JAKARTA (JP): Indonesia will dispatch a team to lobby Japan, the United States and the Europe Union not to dispute its controversial national car policy.

Minister of Industry and Trade Tunky Ariwibowo said after meeting Soeharto that Indonesia hoped the world's three biggest trading powers would not take the car issue to the World Trade Organization's (WTO) panel of judges.

"We will send a team tomorrow to Japan, the United States and Europe to discuss Indonesia's national car policy. We hope the car policy will not be brought to the WTO panel," Tunky said.

The car policy, announced in February last year, grants three- year duty and tax breaks to PT Timor Putra Nasional to make the national car, called Timor, in cooperation with South Korea's Kia Motors Corp..

Since last August, Timor Putra has imported sedans from Kia Motors pending the completion of its own production facilities which are expected to be ready in 1998. Timor Putra started selling its imported cars last October.

Also in October, Japan, the U.S. and the European Union filed complaints with the WTO about Indonesia's car policy, arguing it breached international trade agreements.

After filing complaints they had consultations with Indonesia under the auspice of the WTO.

The next step for them is to drop the case or take it to the WTO panel of judges but they have not yet decided what they will do.

Some analysts have said that if they take Indonesia to the WTO panel, they have a good chance of winning. If so, they will be entitled to retaliate against Indonesia by imposing barriers to some of Indonesia's exports.

Mohamad (Bob) Hasan, chief commissioner of local auto assembler PT Astra Internasional, said the Japanese car industry was not worried about the national car policy.

"It's just the bureaucracy (which insists on challenging the car policy at WTO)," Hasan said after talking Toyota Motor Corp. executives in Tokyo.

Toyota is Astra's partner at PT Toyota Astra Motor, which makes a range of Toyota vehicles in Indonesia, including the popular Kijang van.

"I think the Japanese government will understand. Indonesia is a bigger market than Germany, France and England put together," Hasan said.

Japanese vehicles dominate Indonesia's auto market.

"So do they want to have the market or do they want to lose the market? If they are smart, they will go with us," Hasan said. (rid)