Korean automotive companies ready to support Timor
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)