KIA to resume national car project in Indonesia

KIA to resume national car project in Indonesia

SEOUL (JP): South Korea's KIA Motors Corp. agreed on Friday to
resume the stalled national car project from April after its
chairman met President Abdurrahman Wahid.

The decision came after Abdurrahman visited the company's auto
plant in Hwasong, some 80 kilometers south of here, to talk with
Hyundai-KIA Motors chairman Chung Mong-koo.

"As Presidents Kim Dae-jung and Wahid have agreed in principle
to start again the national car project, it will be resumed at
full swing from April," Chung said in a press release.

"Kia will select an economic model that goes well with
Indonesia's economic situation and national mood," Chung was
quoted as telling Abdurrahman.

Some 70 Indonesian officials and businessmen inspected
assembly lines, including those producing Sephia sedans which
Jakarta has chosen for the project, while Abdurrahman held talks
with Chung.

Hyundai Motor Co., South Korea's largest auto manufacturer,
took over KIA Motors in 1998 after the latter collapsed under
heavy debts.

Abdurrahman expressed his hope that Hyundai-KIA Motors
automotive firm would be able to realize his dream of creating an
efficient and low-cost automotive industry in Indonesia, but also
warned that the government would not provide any privileges for
the giant company.

The government, Abdurrahman said, would create a conducive
atmosphere for the industry to enable the company to produce
cheap vehicles.

The President and First Lady Sinta Nuriyah received two
limousines as gifts from the company. However, he only took home
a miniature of the car. The cars will be sent to Jakarta soon.

The government of former president Soeharto launched the
national car project in 1996, a joint venture between KIA and
Timor Putra National (TPN), which was owned by Soeharto's son
Hutomo "Tommy" Mandala Putra.

A reliable source close to Hyundai-KIA Motors told The Jakarta
Post that Tommy failed to attend the meeting between Abdurrahman
and Chung on Friday and decided to leave Seoul before the
President's visit.

The source said executives of the Korean company advised Tommy
not to attend the meeting or make public statements due to the
sensitivity of the issue on both sides.

"Tommy has left Seoul this morning, as he does not want to
trouble the company," said the source, who spoke on the condition
of anonymity.

State Minister of Investment and State Enterprise Laksamana
Sukardi, who accompanied Abdurrahman here, said it was much
better for the country's investment climate if Tommy was not
involved in the future joint venture because of his controversial
role in the past.

The minister said Tommy's company PT Timor Putra Nasional had
been controlled by the Indonesian Banking Restructuring Agency
(IBRA) following its failure to repay its debt. According to
press reports its bad debt reached at least Rp 3 trillion.

"It will be much better if the Hyundai-Kia Motor finds a new
partner," said Laksamana.

According to Laksamana, Soeharto's decision to develop a
national car project had badly tarnished the country's image as
the government granted unfair privileges to the company,
including tax exemptions.

Minister of Trade and Industry Yusuf Kalla said Tommy had
directly informed him on Thursday that he had given up his
business with the Korean giant company.

"I met with Tommy yesterday, he said the next decision on the
car project was fully up to the government," Yusuf said here.

After the visit, Abdurrahman left for Bangkok, where he will
stay for two days to attend the United Nations Conference on
Trade and Development (UNCTAD).

Leaders of the Association of South East Asian Nations
(ASEAN), UN Secretary General Kofi Annan and Japanese Prime
Minister Keizo Obuchi will be present at the conference. (prb)