Indomobil says new auto policy could harm output
Indomobil says new auto policy could harm output
JAKARTA (JP): Local car producer PT Indomobil Sukses
International announced on Wednesday the government's new
automobile policy would severely hurt its automotive assembly
operation.
Company president Subronto Laras said Indomobil might have to
sell its assembly facilities if the government failed to support
the company's commitment to improve its automotive manufacturing
technology.
"If there is no chance to benefit from manufacturing
activities, I will sell our assembly facilities. We might get
some profit out of it," he said, adding that the new automobile
policy would make being a mere car seller more profitable.
Subronto said he was disappointed with the new policy, which
abolished tax breaks tied to the level of local components used
in automobile production.
He said Indomobil had invested millions of dollars to build
assembly facilities in order to increase its local content.
However, companies which own assembly facilities now receive
the same treatment as those companies which merely import
vehicles, he said.
The government announced last week a new automotive policy in
which import tariffs and luxury taxes on automobiles were
restructured, and incentives for vehicles with high local content
removed.
Cars with high local content, which previously received tax
breaks, are subject to higher import duties and luxury taxes.
Imported cars, on the other hand, pay lower import duties.
Soebronto said the new policy would not automatically increase
the price of Indomobil's most popular model, the Suzuki Carry
van, which has around 50 percent local content.
"It depends on the fluctuation of rupiah against the dollar,"
he said. Suzuki models account for 65 percent of Indomobil's
total sales.
Indomobil reported a consolidated net loss of Rp 717 billion
in 1998, compared to a Rp 404 billion net loss in 1997.
The company attributed the loss partly to a significant drop
in automobile sales.
Car sales dropped by 85 percent in 1998 to 11,808 units, and
motorbike sales fell by 78 percent to 84,406 units.
Soebronto said Indomobil was very active in restructuring its
debt.
He said the restructuring program included moving the debts of
several of its subsidiaries, including truck manufacturer Hino,
from Bank Central Asia, Risjad Salim International and PT Indo
Jaya Tata Lestari to the company's stockholder, the Salim family.
The company plans to convert the debts of Indomobil and a
number of its subsidiaries to equity through private placement,
he said.
Indomobil expects to sell around 10,000 cars and 80,000
motorbikes this year. These figures represent some 20 percent of
total estimated domestic car and motorbike sales of 50,000 units
and 400,000 units, respectively.(cst)