IPTN chooses Alabama city as investment site

IPTN chooses Alabama city as investment site

JAKARTA (JP): The president of PT Industri Pesawat Terbang
Nusantara (IPTN) B.J. Habibie said here yesterday that the
government has finally settled on a site for the state-owned
aircraft manufacturing's assembly plant in the United States.

"The President has decided to choose the town of Mobile in the
state of Alabama as the location for IPTN's assembly plant to
manufacture Indonesian-designed N-250 aircraft," Habibie, who is
also the State Minister for Research and Technology, told
reporters prior to a meeting with President Soeharto at the
Merdeka Palace here.

Habibie said the planned assembly plant, which will be owned
100 percent by IPTN in the preliminary stages of operation, will
be incorporated under the name of American Regional Aircraft
Industry (Amrai) with a total investment of a mere US$12 million.

"Do not be surprised -- it (the investment) is really only $12
million," he said.

Interestingly, the price of one N-250, a 70-seater passenger
plane, is about $13.5 million. The turbo-propeller plane is being
marketed as a commuter plane, Habibie said.

The plane is also designed with fly-by-wire guidance
technology, the first for an aircraft of its size, according to
Habibie.

He also said that the official signing to incorporate Amrai
will be conducted in Paris on June 13 during an airshow event.

Habibie said that for the proposed signing, the United States
will be represented by the mayor of Mobile and the governor of
Alabama, while he personally will represent IPTN.

$1 a year

For the past year, the states of Arkansas, Alabama, Georgia,
Oregon and Utah have reportedly been bidding to become the site
of IPTN's factory in the United States.

The reason why Mobile was picked, Habibie said, was because
the city "will soon give IPTN 14.5 hectares of land already
asphalted and with electricity, telephone lines and road
infrastructure with a rent payment of one dollar a year."

No Alabama state officials were available for confirmation
yesterday.

The German-trained minister explained that IPTN would assemble
only aircraft bodies, whose engines are to be supplied by as-yet-
to-be-named venders.

"We want to capture the North and Latin American markets,"
Habibie said, adding that IPTN would gradually sell about sixty
percent of Amrai's shares through direct-placement transactions.

In April, the Indonesian government announced that the German
state of Niedersachsen would be the site for IPTN's European
assembly plant. No financial details have been given for the
German project.

Various economists have been criticizing IPTN and other
strategic industry companies run by Habibie as inefficient with
low returns of investment, calling them "Indonesia's white
elephants."

Habibie, who is also a senior consultant to the board of
directors of German aircraft company Meerschmitt Boelkow Bohm,
says the inefficiency of his projects has been caused by a lack
of credit-export facilities.

Such facilities, which would involve credit subsidization for
buyers of the projects, are reportedly being studied by
Indonesia's financial authorities. (hdj)