PT General Motors puts RI production plans on hold

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)