'National' cars hit the market
JAKARTA (JP): The Timor Sedan, free from luxury taxes and import duties and made in South Korea but dubbed Indonesia's "national car", made its market debut here yesterday, challenging the Japanese domination of the country's growing car market.
PT Timor Putra Nasional, which plans to produce Timor cars in cooperation with Kia Motors Corp. of South Korea, launched the four-door, 1,500-cc sedan ahead of its original schedule of September.
The Timor Putra's president, Hutomo (Tommy) Mandala Putra, told a news conference that Timor sedans would cost Rp 35.75 million ($15,238), including on-road costs, which is about half the price of comparable Japanese-made cars.
"We target to sell 70,000 Timor cars in 1997. With that volume, we will reach the economies of scale needed to produce the cars in Indonesia," said Hutomo, who is the youngest son of President Soeharto.
The government has let Timor Putra produce and assemble its cars in Kia's plant in South Korea until its local manufacturing plant is ready. Timor Putra is the only car manufacturer granted luxury tax and import tariff exemptions.
Starting next March, he said, the assembly of Timor cars will be transferred from South Korea to local assembly plants, including those owned by PT Indomobil and PT Indauda.
"By that time, we expect that Timor cars will contain 20 percent local components," he said.
To gain tax and tariff breaks, the company must meet the government's local content requirement; namely, 20 percent local content by the end of its first year of production, 40 percent by the end of its second year and 60 percent by the end of its third year.
Hutomo said Timor Putra had established three subsidiaries to support the development of Timor cars: PT Kia Timor Motor, PT Timor Industri Komponen and PT Timor Distributor Nasional.
Kia Timor Motor, a joint venture with Kia Motors, will establish assembly and manufacturing plants in Cikampek, West Java, later this year. Timor Industri Komponen will produce components or buy components from existing manufacturers. Timor Distributor will market the Timor cars.
Design
Hutomo said that Timor Putra plans to establish another firm which will engineer and design new products.
"It will be the brain of our auto group," Hutomo said, adding that his company plans to invest more than US$100 million setting up a research and development center.
Meanwhile, the president of Timor Distributor, Suparto Soejatmo, said that people's interest in Timor cars was good. The company had received orders for 33,000 cars.
"We thank the people for their restraint (for not buying other cars) and patience in waiting for Timor cars," Suparto said, adding that Timor cars would be on display at 22 malls in Greater Jakarta until Nov. 14.
When the government announced its national car policy last February, many local car makers complained of decreased sales because people were waiting to find out about the Timor car.
Governments and car manufacturers from Japan, Europe and the United States have opposed Indonesia's national car policy on the grounds that it breaches the provisions of the World Trade Organization (WTO). They have threatened to bring Indonesia to the WTO if it does not change its national car policy.
Hutomo, however, dismissed suggestions that the Japanese, who control around 90 percent of the Indonesian vehicle market, could take Indonesia to the WTO.
"We are looking for the best solution for the Japanese as they know the national car program cannot be stopped and they need to look for a compromise with the Indonesian government," he said.
The Americans, he added, now understood the program after a recent visit to Washington by Minister of Industry and Trade Tunky Ariwibowo, who attended yesterday's launch.
Tunky, speaking to reporters, defended the policy saying that despite industry deregulation in 1993, car makers had failed to increase local content.
He said under the new regulations issued last month, car makers other than Timor Putra could get luxury tax breaks if they met local content targets.
"As soon as local contents reach 60 percent, car makers will have the same facilities as those of Timor Putra," he said.
Tunky reiterated that Timor Putra would be the only producer to get special tax and tariff privileges for the national car project.
He dismissed speculation that the government would extend the same breaks to the Bimantara Group, controlled by Hutomo's elder brother Bambang Trihatmodjo. Bimantara, through its auto subsidiary PT Citramobil Nasional, plans to launch a 1,500 cc sedan on July 23. It will be called Bimantara Cakra. (rid)