Indonesia urged to resolve auto dispute

Indonesia urged to resolve auto dispute

HONG KONG (AFP): European Commission Vice-President Leon Brittan yesterday urged Indonesia to bring its national automotive policy into line with World Trade Organization (WTO) rules.

Brittan said he had personally told Indonesian President Suharto that Europe did not believe Jakarta's national car policy was consistent with the WTO trade agreement.

"We very much hope that a resolution of the matter can be found whereby Indonesia brings itself into line with that agreement," he told a World Economic Forum conference here.

Europe, the United States and Japan filed complaints to the WTO last month, saying that Indonesia's policy on its so-called national car flouted WTO trade rules.

President Suharto in February ruled that producers of a national car would be granted exemptions on import duties and luxury taxes, which add about 60 percent to the price of other cars in Indonesia.

Tunky Ariwibowo, Indonesia's minister of trade and industry, told the same conference that his country faced problems as a developing nation within the WTO.

There were provisions within WTO rules, he said, for Indonesia to have time "to adjust part our economic policy to catch up with the developed world. "

Under the Indonesian policy, PT Timor -- controlled by Suharto's youngest son Hutomo Mandala Putra -- has been named as the first national car supplier enjoying tax breaks.

In a joint venture with Kia Motors, PT Timor is allowed to import the cars from South Korea until its own factory starts in 1998. It is required to clear an eventual goal of a local content in the car exceeding 60 percent.

The World Economic Forum, a Switzerland-based forum of business executives, government officials, bankers and economic experts, Monday started a three-day meeting focussing on ties between Europe and East Asia.