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.