Local automotive component producers face huge losses

Local automotive component producers face huge losses

JAKARTA (JP): A slump in the country's car market has caused
domestic automotive component producers to regret their more than
Rp 30 trillion (some US$3.4 billion) accumulated investment in
the industry over the last three years.

Such a large investment was based on the then rosy outlook for
the automotive market, the president of the Indonesian Automotive
Parts and Components Industries Association, Achmad Saifun, said
during the inauguration of state-owned surveying company
Sucofindo's new president on Wednesday.

"In 1997 we predicted 750,000 cars could be absorbed by the
domestic car market in 2000, but the country's economic crisis
has not made this possible," Safiun said.

He said that most of the association's members could suffer
large losses from their investments because their facilities
could not operate to full capacity in the sluggish market.

In 1998, the car sales were expected to fall by 85 percent
from 366,435 cars 1997 as the crisis bited deeper in the economy.

The government's ambitious national car program inspired the
domestic automotive parts and components industry to increase its
investment significantly.

The program, while promising brighter prospects for the
domestic car industry, showed favoritism by awarding special
treatment to PT Timor Putra Nasional's Timor sedan.

Saifun said some of the association members suffered losses
when Timor Putra, one of their main partners, defaulted on its
contracts.

"We are in a crisis and the status of the Timor project is
unclear... this is called a business risk," he said.

The government gave PT Timor Putra Nasional in 1996 the sole
right to develop the controversial national car program. This
preferential treatment was lifted following the enforcement of
sanctions imposed by the World Trade Organization on Indonesia
because of the program.

The national car program, which won wide support from both the
government and the automotive industry, has been under pressure
following the resignation of president Soeharto in May last year.

Timor Putra, owned by Soeharto's youngest son Hutomo (Tommy)
Mandala Putra, is now required to pay Rp 1.9 trillion ($218
million) in unpaid import tariffs because the company did not
meet requirements imposed on it as the only producer of the so-
called national car.

The customs office on Tuesday last week issued a final warning
letter giving Timor Putra 48 hours to pay the tariffs.

Muhammad Zein, a senior official at the customs office, said
on Wednesday that his office soon would seize Timor's assets
because the company did not meet the deadline.

During the inauguration ceremony at Sucofindo's office in
South Jakarta, Didie Tedjosumirat, former operations director at
the company, was installed as the new president. Also, Soeminto
Tabri, former head of work safety and health at the company,
assumed the position of operations director.

Sucofindo, which now focuses on international standard quality
certification, booked operating incomes of Rp 416 billion, Rp 621
billion and Rp 670 billion in 1996, 1997 and 1998 respectively,
Didie told reporters.

"We hope to make Rp 650 billion this year by focusing more on
the business of international standard quality certification for
firms in the natural resources industry," he added. (02)