National car program to continue

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)

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