Minister again defends national automotive policy

Minister again defends national automotive policy

JAKARTA (JP): Minister of Trade and Industry Tunky Ariwibowo
has again defended the controversial "national car" policy,
saying that the pioneer status given to PT Timor Putra National
is a breakthrough for the future of the automotive industry.

Tunky said that the pioneer status, which will provide special
tax incentives to Timor Putra, was introduced to revitalize the
stagnant domestic automotive industry.

"The automotive industry has been developed for more than 20
years here. But as you see, the progress has not been
satisfactory," he said in replying to a question raised at The
Indonesia Summit yesterday.

He said that certain local companies might have met the
criteria to receive the pioneer status: "but for the time being
we would see only one company.

"This policy will remain for three years because we want to
see the progress of this company (Timor Putra), how it is
responding to this policy and how it is making progress," he
said.

Tunky said that the three-year special treatment is also
needed to find out if there any problems arise during the
implantation of the new car policy.

In February, the government granted pioneer status to Timor
Putra, owned by President Soeharto's youngest son Hutomo Mandala
Putra, to produce the so-called national car with Kia Motors of
South Korea.

The pioneer status would allow Timor Putra to receive a series
of tax breaks including the exemption from import duties and the
luxury tax sales. The tax incentives will enable the company to
sell its cars at half the price of Japanese cars of the same
class (with 1,600 cc engine).

Sedans are normally subject to 100 to 200 percent import
duties and luxury tax rates of 25 to 35 percent.

According to the new automotive policy, local components used
by automobile companies which have been granted pioneer status
must be at 20 percent of the whole car by the end of the first
year of production, 40 percent by the end of the second year and
60 percent by the end of the third years.

The Japanese auto industry has urged Indonesia to reconsider
its policy on the national car project, describing it as an
"international concern". (hen)