No formal protests on RI car policy

SINGAPORE (JP): Renato Ruggiero, director general of the Geneva-based World Trade Organization, said yesterday he had not received any claims from any government regarding Indonesia's national automobile development policy.

"I am not a judge of that," Ruggiero told a news conference in reply to a question about which of the World Trade Organization's (WTO) rules had been violated by the February, 1996 Indonesian car policy, which many analysts and businesspeople have labeled discriminative.

Ruggiero, who attended the World Trade Congress here, said WTO has its own mechanism for settling disputes and one of the basic procedures is a claim filed by a government.

"Up to now, not a single government has come to us to claim that the Indonesian government has violated WTO rules and I am not in a position to say which is right and which is wrong," he added.

He said he would not comment on remarks made by Leon Brittan, the vice president of the Commission of European Communities in Jakarta on Tuesday.

Brittan, who made a two-day visit to Jakarta before coming here to attend the World Trade Congress, saw the Indonesian car policy as a violation of WTO rules and suggested that the government review the policy.

The new car policy was announced late February in what the Indonesian government claims is a concerted effort to develop a national car with a national brand name that also can be exported.

However, the policy immediately came under strong criticism from analysts, businesspeople, and especially the Japanese government and carmakers because the import tariff and tax breaks offered under the policy were granted only to one company, PT Timor Putra Nasional, which has yet to establish an assembling plant.

Timor Putra plans to develop a new passenger car bearing the brand name of Timor in cooperation with Kia Motor Co. of South Korea.

The Japanese government itself initially threatened to take the issue to WTO but both governments later agreed to solve the issue through bilateral talks.

Brittan, who also held a news conference here yesterday, summarized what he had stated to the Indonesian government and mass media in Jakarta on Tuesday.

He said he had asked the Indonesian government to keep the European Commission apprised of the outcome of its bilateral talks with Japan on the car policy issue.

Brittan added, however, that Indonesia is not alone in regard to government policies in violations of WTO rules.

Asked whether he would raise the same issue with Malaysia, Brittan said he had not visited Malaysia but he added he would express the same concern if Malaysia or Brazil took similar discriminative policies.

In Jakarta, the executive director of Timor Putra, Sudjaswin E.L., said that his company will launch the Timor car in September as scheduled, regardless of international criticism of Indonesia's automotive policy and the company.

He acknowledged that the government's granting of tax and tariff breaks to his company will help it in penetrating the local automotive market, which has long been dominated by Japanese cars.

To strengthen the company's position, Sudjaswin said, his company, through its subsidiary PT Merdeka Pratama Prima Permai, will invest US$265 million to build a car engine factory in Cikampek, West Java.

He noted that the company will use existing local suppliers in the development of the Timor car, so that the car will have local contents of 60 percent in the third year of production, as required by the government. (vin/rid)