National car program to continue

JAKARTA (JP): President Soeharto yesterday asserted that the controversial national car program would go ahead, despite a Japanese government decision to bring the policy before a World Trade Organization panel.

"Indonesia is obviously disappointed by Japan's attitude which does not accommodate our national interests whereas previously we helped Japan during the energy crisis," State Secretary Moerdiono told newsmen after a meeting with President Soeharto.

Moerdiono said President Soeharto had ordered the cessation of bilateral negotiations with Japan on the issue and has reasserted a determination to continue with the program.

President Soeharto yesterday summoned nine ministers with economic portfolios to a special meeting on Japan's decision to bring the dispute to the WTO.

The ministers included Coordinating Minister for Production and Distribution Hartarto, State minister of Research and Technology B.J. Habibie, Minister of Industry and Trade Tunky Ariwibowo, Finance Minister Mar'ie Muhammad, State Minister for Investment Sanyoto Sastrowardoyo, Governor of Bank of Indonesia Soedradjad Djiwandono, and Minister/State Secretary Moerdiono.

Overall relations

Moerdiono, however, said the Japanese move would not affect the overall relations between the two countries.

"The Japanese move has strengthened our resolve to reduce our economic dependence on other countries," Moerdiono added.

The national car program, launched early in 1996, grants tax and duty exemptions to PT Timor Putra Nasional to produce sedans bearing the Timor brandname.

Since the company has yet to build an assembly plant, PT Timor Putra was licensed by the President to import up to 45,000 fully assembled Timor cars from its South Korean joint venture partner, Kia Motors Inc.

In October 1996, Japan, the United States and European Union filed separate complaints to the WTO over the national car policy which they allege is discriminatory and in violation of WTO rules.

Indonesia initiated separate bilateral negotiations with the three complaining parties in November 1996 under WTO supervision.

"We cannot understand why Japan has refused to understand our national car program," Moerdiono noted.

According to Moerdiono, President Soeharto was disappointed with the Japanese move because the production of Timors was negligible compared to the output of Japanese cars.

He said the U.S. and EU had also complained about the national car policy.

"But our negotiations with the U.S. are still proceeding, while Japan has decided to bring the dispute to a panel," he added.

President Soeharto, according to Moerdiono, instructed the ministers to make coordinated efforts to implement the national car program.

"The finance minister and the governor of Bank Indonesia have been instructed to seek adequate financial packages for the manufacture of local components for the national car program," Moerdiono said.

He said despite Japan's request for a panel assessment of the dispute, Indonesia still had adequate time to produce a national car.

The process of WTO dispute settlement, including appeals, is not expected to be completed until 1999.

"The government is determined to develop a national car. After all, Indonesia has been able to build airplanes and large sea vessels," he said.

Tunky said after meeting the President he would embark on a four-day visit to Japan to promote Indonesian garments and textiles.

"I also want to woo more Japanese investment in the electronics and automotive components in Indonesia," Tunky added.

But Tunky said he would not discuss the national car policy in Japan as President Soeharto has ordered the cessation of bilateral negotiations on the issue. (06)

Editorial -- Page 4