Govt won't guarantee bank loans for Timor car

JAKARTA (JP): Minister of Finance Mar'ie Muhammad said yesterday the government would not guarantee national car producer PT Timor Putra Nasional's bank loans.

Mar'ie said the government guaranteed loans only for state budget financed bank loans.

"We won't provide a government guarantee to Timor Putra. Even state firms cannot get a government guarantee to get loans from state banks. And remember, Timor is a private company," Mar'ie said.

Bangun S. Kusmulyono, Bank Nusa International's president, said last week no banks would extend credit to big projects without assessing their feasibility studies and getting a guarantee or collateral.

He said banks could not just lend wherever they wished because the money was not theirs but the people's.

In February 1996, the government granted import duty and luxury tax exemptions to PT Timor Putra Nasional as the sole producer of a so-called national car, driving its cost down 60 percent lower than other cars in Indonesia.

Timor Putra -- controlled by President Soeharto's youngest son, Hutomo Mandala Putra -- is cooperating with South Korea's Kia Motors Corp. to produce the national car. It currently imports the Timors fully assembled from South Korea as its production facilities are still being built.

The government has also ordered three state banks and 10 private banks to finance the construction of the Timor manufacturing facilities because foreign banks canceled their credit commitments to Timor Putra due to international disputes over Indonesia's national car policy.

The consortium of 13 banks, led by state-owned Bank Dagang Negara, was initially asked to lend US$1.3 billion to Timor Putra.

But Coordinating Minister for Economy and Finance Saleh Afiff said earlier last week the government would slash the requested loan amount, from domestic banks for Timor Putra, because of the questionable sales targets set for the car.

Afiff said Timor's projected sale of 200,000 sedans by 1999 was an overestimation. He said the country's best-selling vehicle, Toyota's Kijang van, sells just 70,000 cars a year.

Hutomo Mandala confirmed that his company needed $1.3 billion to develop its car industry. But it will raise only $690 million from domestic banks. The remaining $610 million will be raised from its own equity, operational profits and its planned initial public offering next year.

Abdullah Ali, president of Bank Central Asia, the country's largest privately owned bank, said last week most banks were very careful when dealing with automotive and property projects because both dealt in consumer goods.

He also said his bank had yet to decide whether it would join the consortium to finance the development of the Timor. (rid)