Korean automotive companies ready to support Timor

JAKARTA (JP): South Korean car sellers plan to start operations in Indonesia to support this country's national car program.

The chairman of the Korean Automotive Component Industries Association, Hee Choon Ryu, said in Seoul yesterday that Korean vendors will start building component plants in Indonesia once the Timor car, deemed to be the national car, is ready for the market.

"We will start building component manufacturing facilities when Timor has been produced and marketed in Indonesia," Ryu told Antara in Seoul, when asked about Indonesia's national car program.

The government announced in February that it would grant tax and tariff breaks to PT Timor Putra Nasional, which promised to develop a national car, called Timor, in cooperation with Kia Motors Corp. of South Korea.

The policy has sparked criticism and protests from the Japanese government and car auto manufacturers. The Indonesian government, however, defiantly stands by the policy.

Indonesian Minister of Industry and Trade Tunky Ariwibowo said last week that the government would go ahead with its controversial national car project despite the Japanese threat to take the case to the World Trade Organization (WTO).

The Indonesian government refuses to negotiate with Japan over its plan to manufacture national cars and will, instead, ask for a stronger commitment from South Korea's Kia Motors Corp. to make the project a success,

Supporting Indonesia's national car policy, Ryu said the program will help Indonesia acquire auto technology and become independent in the auto sector.

"However, the program must be supported by an efficient and highly-qualified supporting industry so that the yet-to-be produced car can conquer the market," Ryu suggested.

He said his association has conducted a feasibility study on the components needed by Timor as a preparation to invest in the component industry in Indonesia.

"Preparations for investment (in Indonesia) are not a big problem. What matters for us is the certainty that Korean firms can enter the sector," Ryu said.

However, Ryu could not forecast the possible amount of investment, saying that it depends very much on the type and volume of the required components.

"Each investor will always calculate their investment's break- event point and it depends on the amount of funds provided by banks," Ryu said.

He noted that the potential returns from building component plants in Indonesia are very lucrative, especially after the government introduced the national car policy, which requires Timor to have 60 percent local contents within three years.

"It means it needs a lot of local auto vendors to support the national car," Ryu said. (rid)