Kia and Timor required to make countertrade deal
Kia and Timor required to make countertrade deal
By Riyadi
SEOUL (JP): The Indonesian government has asked Kia Motors
Corporation of South Korea to buy car components off PT Timor
Putra Nasional before exporting the "national cars" to Indonesia.
Kim Seung-ahn, executive vice president of Kia Motors, said
here yesterday that Indonesian Minister of Industry and Trade
Tunky Ariwibowo had told his company to buy auto parts from
Indonesia worth 25 percent of the value of Kia's assembled cars
to be exported to Indonesia.
"We are now under negotiations to make contracts between Timor
Putra and Kia Motors on how to materialize the countertrade," Kim
said in an interview with The Jakarta Post.
Kim said a committee of representatives from Kia Motors, Timor
Putra and the Indonesian Ministry of Industry and Trade was
discussing which parts to import.
Timor Putra, controlled by President Soeharto's youngest son
Hutomo Mandala Putra, is the only company allowed by government
to follow the "national car" program. The program grants tariff
and tax incentives for three years. Timor Putra and Kia Motors
are developing the Timor 1,500 cc car under this program.
Timor Putra initially planned to assemble Timor cars in
Indonesia at other car companies' assembly plants, because its
own plant in Cikampek, West Java, would not be ready until 1998.
The company has not found any suitable plants.
The government then let Timor Putra import its South Korean
made cars duty free for one year so long as the cars were
assembled here with 20 percent Indonesian content.
Chairman of Kia Motors Kim Sun-hong described the new
countertrade requirement as a burden. But he still wants to make
Indonesia's national car program successful.
"We understand that there are some limiting factors from our
point of view, for instance, the issue that we have to purchase
some 25 percent of Indonesian parts. We have to modify our
designs," Kim Sun-hong said.
Kim Seung-ahn, who is chief of the Indonesia-Korea project at
Kia Motors, confirmed his company would produce Timor cars at its
auto factory at Asan bay, Chungchong, South Korea, using some
Indonesian trainees.
"They work as trainees here. They are trained directly on the
assembly lines. Our people and your people are working together.
On one side it is training and on the other side it is a
manufacturing process," Kim said.
The first 60 Indonesian trainees would arrive later this month
and 1,000 are expected to arrive within a year, he said.
He said the first shipment of Timor cars would arrive in
Indonesia early July and be on sale in September.
Kia Motors will ship 4,000 Timor cars per month until March
1997. In April 1997, the cars' components will be exported from
Korea and assembled in Indonesia.
"And we will start to manufacture Timor cars in the Cikampek
facility in two years from September this year," he said.