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.