IBRA decides to rev up national car project

IBRA decides to rev up national car project

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
has decided to revive the much criticized national car project.

IBRA's deputy chairman Eko S. Budianto said on Monday the
agency would reactivate Timor's assets because starting the
program in the first place had cost too much money.

"IBRA will make Timor's assets productive again. It is not a
matter whether it is still controlled by its old owners or new
ones," he said.

The national car project managed by PT Timor Putra Nasional,
was suspended due to its failure to repay debts to creditors.

The company, controlled by former president Soeharto's
youngest son Hutomo Mandala Putra, is reportedly one of the 20
biggest private debtors in state banks, which are now under the
control of IBRA.

Earlier this year, Minister of Industry and Trade Rahardi
Ramelan said Timor Putra could be taken over and converted to a
state firm if the controversial car producer did not settle its
debts.

"If the government confiscates the company's assets, the
company must continue operating. The government could run it as a
state company or sell it to private investors," he said.

Taking over the company and converting it to a state company
would preserve the company's assets, he said.

Besides massive loans owing to state banks, the company also
owed some Rp 30.09 billion in backdated import duties to the
government.

In Feb. 1996, Timor Putra was awarded the right to develop a
national car by then president Soeharto. The company was granted
exemption from import duties and tax exemptions to import
assembled sedans manufactured by South Korea's Kia Motor Co.

The exemptions were granted on the condition the company
establish an assembly plant in Indonesia in its second year of
operation and gradually increase the use of locally manufactured
automotive components.

The company failed to fulfill the terms of the agreement and
must pay backdated tax and import duties on the 40,960 cars it
imported.

According to Attorney General Andi M. Ghalib, the national car
program was made possible because of collusion between Soeharto
and government officials.

Japan, the European Union and the United States filed a
complaint against Indonesia's national car project with the World
Trade Organization in Geneva last year agand won a ruling in
their favor. (gis)