Hyundai Motor shelves auto project in RI
Hyundai Motor shelves auto project in RI
SEOUL (AFP): South Korea's largest automaker, Hyundai Motor
Co., yesterday shelved a major joint-venture in Indonesia
"temporarily," citing financing problems, and said it may have to
pull out altogether.
"We have decided to shelve the 400 million dollar project in
Indonesia because of high investment costs," said a spokesman for
the company.
"We are considering completely withdrawing from the joint-
venture if things do not improve by April," another Hyudai
official said.
The project with PT Bimantara Citra, to produce 100,000 cars
annually, will be shelved until April when Indonesia completes
negotiations on reducing tariffs on imported cars, he said.
The temporary suspension, decided upon by Hyundai Group
directors, was a major setback in Hyundai's ambitious plan to set
up a car production network in Asia.
"It was needed for us to survive in an IMF bailout program,"
he said. "But our overseas production in Malaysia, Turkey and
India will not be affected."
He said Hyundai would resume its project in Indonesia "if the
situation returns to normal," acknowledging the group was also
troubled by South Korea's prolonged financial crisis.
"Both Hundai and Bimantara have problems in financing
following the sharp depreciation of their currencies," he said.
Indonesia has agreed to reduce high tariffs now ranging at 200
percent on imported cars in return for a bailout from the
International Monetary Fund (IMF).
"The project will be restored only if Indonesia decides to
maintain the current 200 percent tariffs on imported cars," the
spokesman said, indicating the project could be shelved
permanently.
Bimantara and Hyundai in June began building the joint-venture
plant to produce Avante and Accent models from 1999.
"With the current high investment costs, we cannot make any
profits there. We had to shelve the plan until April," the second
official said.
But he said the company's existing joint-venture plant with
Bimantara, which was launched in 1995 and now produces 10,000
Accent models annually, would be kept alive.
"Indonesia is an important market in Southeast Asia. We do not
want to lose our stronghold completely there," the Hyundai Motor
spokesman said.
Since South Korea agreed last month to accept rescue funds
from the IMF, Hyundai has launched a down-sizing program by
reducing costs and cutting back on next year's investment.
"Everything is now shaky. So we cannot but restructure our
overseas auto production. For a while, we will try to boost
production here for exports to avoid forex losses," he said.