Pismatek cancels car deal

JAKARTA (JP): PT Pismatek Group from Pekalongan in Central Java said yesterday it had canceled its plan to produce automotive components for the Timor car project.

Pismatek Group president Djamal Ghozi said the company won a contract several months ago to supply pistons to the Timor car project, owned by Hutomo Mandala Putra, the youngest son of former president Soeharto.

"We have to cancel the plan because the Timor car project involved corruption, collusion and nepotism," Antara quoted him as saying.

The Timor, dubbed the national car, sparked controversy in domestic and international markets in 1996 when it exclusively received import duty and luxury tax exemptions to import cars from Korea's Kia Motor Corp.

The incentives enabled PT Timor Putra Nasional, part of the Humpuss Group owned by Hutomo, alias Tommy, to undercut all other car manufacturers in the country by 60 percent.

But under the economic agreement signed between Indonesia and the International Monetary Fund, in exchange for a US$43 billion bail-out package, the special tax facilities were removed.

Djamal said Pismatek Group would continue its business activities despite having no alliance with a power-related business group. (aly)