PT General Motors puts RI production plans on hold

JAKARTA (JP): PT General Motors Buana Indonesia (GMBI) has put production of its Opel Vectra sedans on hold because of uncertainty over the national car program, a company executive said yesterday.

GMBI president William S. Botwick said the company would begin producing the Vectra "once the uncertainty is eliminated or clarified".

In February the government announced a preferential car policy that exempted one car manufacturer from import duties and luxury taxes.

Only PT Timor Putra, controlled by President Soeharto's youngest son Hutomo Mandala Putra, has qualified for the tax exemptions which will last three years.

Timor Putra is making the national car in conjunction with South Korea's Kia Motors Corp.

But because Timor Putra has inadequate production facilities in Indonesia, the government has let the company manufacture the cars at a Kia plant in South Korea. These are then exported to Indonesia.

The policy has generated fierce criticism from the United States, the European Union and Japan, all of which are taking the issue to the World Trade Organization.

On the national car policy, Botwick said there were two models for developing the automobile industry: the "Malaysian model" and the "Thai model".

The Malaysian model is similar to Indonesia's national car policy, while the Thai model allows car manufacturers to compete in a fair market, Botwick said.

"But see where everybody is going to... All of them are going to Thailand, they prefer the Thai model which goes by a better automotive policy," Botwick said, referring to recent investments by a number of leading automobile makers, including General Motors Corp.

Before the national car policy, he said, Indonesia was actually "going in the right direction". Since then, however, there has not been fair competition.

"One company being given a significant advantage is not competition... Similar concepts have never worked in other countries," he said.

Despite delaying production of the Opel Vectra, Botwick said the national car policy did not impact on the production and sales of its Opel Blazer jeeps. It has sold 2,600 of the jeeps since it began producing them.

"The sales of Opel (line of vehicles) have increased four-fold since last year, primarily due to the Blazer," Botwick said.

A blazer jeeps costs Rp 72 million (US$31,168).

GMBI -- 40 percent owned by Probosutedjo, the chairman of the Mercu Buana Group, and 60 percent by General Motors Corp of the United States -- aims to sell 5,500 Opel Blazer jeeps domestically this year and 8,000 next year.

Botwick said GMBI, which has invested US$110 million, can produce 600 vehicles a month.

Botwick also announced a special GMBI service for Opel customers called the "Opel Clinic".

The clinic, open from Nov. 16 to Nov. 25, will provide free vehicle services in Jakarta. The clinics will be held at five Opel distributors: Armada Auto Graha, Citra Nusa Wahana, Hang Tuah showroom, Fontana Indah Motor and Sun Nusantara Motor. (pwn)