Incentives planned for car industry

Incentives planned for car industry

JAKARTA (JP): The government has approved domestic investors'
plans to manufacture sedans locally and will provide them with
incentives, Minister of Industry Tunky Ariwibowo said here
yesterday.

"We are studying the kinds of incentives possible," Tunky
said.

Businesspeople have been criticizing the domestic automotive
industry of focusing production on commercial vehicles.

"The automotive industry has to anticipate the tendencies of
overseas producers which concentrate on the production of
sedans," Antara quoted the president of PT Citramobil Nusantara,
Poeng W. Lubis, as saying yesterday.

Lubis warned that if local automakers do not manufacture
sedans, cars from overseas will flood the domestic market when
trade liberalization comes into effect.

Indonesia has agreed with the other members of the Association
of Southeast Asian Nations (ASEAN) to start free trade in the
region by 2003 and with Asia-Pacific countries in 2020.

Malaysia, a member of the association, has produced its own
car, the Proton, by developing Mitsubishi technology.

The Proton has accelerated annual domestic sales by exceeding
100,000 units.

Malaysia has made a deal to pay for six Indonesian-made CN-235
aircraft with 2,500 Proton cars in an apparent attempt to break
into the highly protected Indonesian auto market.

Poeng said local auto producers are reluctant to manufacture
sedans due to their high cost.

"The excessive tax on imported engines and parts has caused
cars to be very expensive in Indonesia," Poeng said.

He urged the government to reduce or even eliminate duties on
imported engines and parts to support the growth of Indonesia's
automotive industry.

Hutomo Mandala Putra, popularly called Tommy, has said that he
plans to establish a new automotive assembly plant in Cikampek,
West Java, to produce jeeps and sedans combining Italian
Lamborghini and South Korean Kia technologies.

"We will produce 50,000 cars which will bear an Indonesian
brand name," Tommy, who also drives racing cars, said last week
after meeting with minister Tunky. (kod)