Japan seeks compromise from RI on auto dispute

Japan seeks compromise from RI on auto dispute

MANILA (AFP): Japanese International Trade and Industry Minister Shinji Sato on Wednesday made a strong demand for Indonesian compromise over a bilateral auto dispute, ministry officials said.

Sato made the remarks during a meeting with Tunky Ariwibowo, Indonesia's minister of trade and industry, on the sidelines of this year's summit of Asia-Pacific Economic Cooperation (APEC) in the Philippines.

"There has not been any single proposal from Indonesia," Sato was quoted by the officials as telling his Indonesian counterpart.

"It was extremely regrettable," Sato said. "Indonesia really needs to take action and make efforts to solve the problem."

In October, Tokyo lodged a complaint with the World Trade Organization (WTO) in Geneva over Indonesia's granting import tax exemptions to designated "national cars."

Japan, along with the United States and the European Union, maintains the Indonesian auto program violates international trade rules.

Sato warned that Tokyo would upgrade its complaint to a panel under the WTO's auspices if Jakarta continues insisting on its stance.

"We cannot help but take the step to a WTO panel," Sato told Ariwibowo.

"As time is limited, a new proposal is really needed from the Indonesian side."

The issue is now under bilateral discussion at the Geneva- based organization. Officials said Japan would finish those discussions possibly in early December and appeal to the panel as early as January.

Ariwibowo refused to make an immediate reply to the Japanese warning, only saying his country "would make an effort."

A senior Japanese official said: "We have been really irritated as Indonesia appears to have no intention of solving the issue. We do not need sincerity. We need something concrete, or progress."

The complaint followed Jakarta's decision to allow cars made by South Korea's Kia Motors Corp. for PT Timor Putra Nasional to be sold without the levying of import duties and luxury taxes imposed on other auto makers.

Japanes auto makers, most notably Toyota Motor Corp., dominate the Indonesian car market.

A decree issued by President Soeharto in February ruled that producers of a so-called 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.

PT Timor -- controlled by Soeharto's youngest son Hutomo Mandala Putra -- was chosen as the first national car supplier and is required to clear an eventual goal of a local content exceeding 60 percent.

Indonesia is Asia's second largest vehicle market after Thailand, reaching 380,000 units in 1995, with Japanese markers holding 90 percent of the market.

But Japanese automakers have seen their sales plunge since the car plan was announced in February as Indonesian consumers waited for the Timor, which sells for about half the price of a foreign sedan.