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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