Local carmakers want delay in implementation of AFTA

Local carmakers want delay in implementation of AFTA

JAKARTA (JP): Indonesian car manufacturers have called on the
government to delay the implementation of the ASEAN Free Trade
Agreement (AFTA) to give the local automotive industry more time
to enter the free competition era.

Chairman of the Association of Indonesian Automotive
Industries (Gaikindo) Bambang Trisulo said here on Tuesday that
the government should first allow the local car industry to
recover from the country's worst ever crisis before fully opening
up the market.

"Compared with the other ASEAN members, we've been the most
hard hit by the regional crisis. From this point of view, it
would be too risky for Indonesia to fully join the AFTA," he said
on the sidelines of a seminar on the prospects for Indonesia's
automotive industry.

Automotive expert Suhari Sargo backed Bambang's view, saying
that the country's prolonged volatile political climate had
further hampered the recovery of Indonesia's car industry, making
it more difficult to prepare itself for the fiercer competition
that would result from the AFTA.

"Considering our industry's lack of preparation, I suggest the
government consider asking for an exemption until 2005, just like
Malaysia did, or call the other ASEAN members to reschedule the
date to a certain period which we all agree on," he said.

Bambang, however, said he was skeptical that the Indonesian
government would agree to backtrack from the AFTA.

The government had always shown a strong commitment to the
AFTA pact, although it acknowledged the poor condition of the
country's car industry, especially in the engineering
infrastructure, he said.

According to the AFTA, agreed on by the Association of South
East Asian Nations (ASEAN), which groups Brunei, Cambodia,
Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore,
Thailand and Vietnam, import rates of automotive products will be
lowered to a maximum of 20 percent by the year 2000, and further
cut to between 0 percent and 5 percent by 2003.

But Malaysia has made a special request to be allowed to
maintain protective rates on automobile imports until 2005 to
protect its national car projects.

ASEAN economic ministers meeting in Yangon earlier in May
agreed to consider Malaysia's request and will take a decision on
the matter in October.

Secretary-general of The ASEAN Automotive Federation Gunadi
Sindhuwinata, who also spoke at the seminar, said Indonesia had a
good reason to ask other ASEAN members to delay AFTA's
realization of the car industry because a harmonized settlement
for the car component sector in the planned liberalization of car
industry under AFTA had not been achieved by the members.

Under the existing AFTA agreement, ASEAN members must use at
least 40 percent of regional contents in the making of their
automotive products to be sold within the region.

"Since there are some loopholes in the settlement, it can be
easily manipulated. A certain country may claim that its products
contain 40 percent local content, while in fact they do not. Many
of us are still depending on imported goods for car components,"
he said.

Indonesia imposes rates of between 65 percent and 80 percent
on the imports of completely built-up cars.

According to Bambang, Indonesia has great potential to export
its minivans to neighboring countries, but the country must be
aware of competition from car products from Thailand.

Bambang expected the country's automotive market to gradually
recover, with sales predicted to reach 200,000 units this year,
250,000 in 2001 and 300,000 units in 2002. (cst)