National car likely to harm local industry

National car likely to harm local industry

By Mitchell Mackey

The secretary-general of the influential Association of Indonesian Automotive Industries, Mr F Soeseno, has cautioned against expecting an early announcement concerning the go-ahead for a national car project.

"There are still a lot of things to be decided and I believe a lot more time is needed," he told Automotive Business in Jakarta this week.

He said the exact definition of a national car project was not yet finalized, especially as there were now two competing projects vying for official sanction.

The creation of a national car project is also likely to antagonize local car assemblers hoping for a relaxation in tariffs. For the national car program to work, a good deal of assistance and protection for local component companies would be needed.

It is understood that Tommy Suharto has submitted a proposal regarding the use of Kia as a technology donor, which would involve an exemption from tariffs for the project for up to three years.

Mr Soeseno said he believed the government would consider the position of established car assemblers before making any decisions regarding the national car.

He said the national car would have to sell from between Rp 10 million and Rp 20 million in order to attain the significant sales volume necessary to make the project viable.

He said the quickest solution to the national car problem lay with the Kia option, which involves drawing car making technology from Kia in a similar manner to Malaysia's use of Mitsubishi technology for Proton.

He also said it would be important for the national car's makers to convince the buying public that the product was not of dubious quality just because it was affordable.

It is also believed that Kia is still interested in setting up its own operation in Indonesia.