Japan, RI to talks on car plan

Japan, RI to talks on car plan

TOKYO (Kyodo): Japan and Indonesia agreed yesterday to hold
working-level talks on Jakarta's new program for development of a
"national car," an official of the Ministry of International
Trade and Industry (MITI) said.

MITI Minister Shumpei Tsukahara and Indonesia's Industry and
Trade Minister Tunky Ariwibowo met and reached the accord. The
two countries hope to hold the talks as soon as possible, the
official said.

While appreciating Indonesia's recent economic liberalization
efforts, Tsukahara told Tunky that the planned auto program is
inconsistent with such efforts and could be incompatible with
rules of the World Trade Organization (WTO), the official said.

Under the program, Indonesia awards and import tariff luxury
sales tax exemptions to cars that satisfy local content
requirements.

Japan considers linking tax exemptions and local content as
incompatible with WTO rules, according to the official.

Tunky sought Tsukahara's understanding on the scheme, saying
Indonesia needs to improve its automotive technology and
reinforce the nation's industrial foundation, the official said.

Tsukahara repeated the importance of compatibility with WTO
rules, he said.

MITI expects to elucidate problems with the scheme, which it
finds vaguely formulated, through working-level talks before
deciding whether to file a case with the WTO, the official said.

At the moment, PT Timor Putra Nasional, an automaker
controlled by Hutomo Mandala Putra, President Suharto's youngest
son, is the only company that is qualified for national car
privileges.

Toyota Motor Corp. and other Japanese automakers, which have
invested heavily in Indonesia and have enjoyed a dominant
presence in the local market, are concerned that the program
could deal them a heavy blow, industry sources said.

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