PT Timor to raise public funds in '98 for national car
PT Timor to raise public funds in '98 for national car
JAKARTA (JP): The government-appointed producer of Indonesia's
national car, PT Timor Putra Nasional, yesterday launched its
first domestically assembled sedan and promised to finish its car
program by early 1999.
The company's president Hutomo Mandala Putra -- President
Soeharto's youngest son -- said the company would go public next
year to raise funds to develop the car.
Hutomo, also known as Tommy, said Timor Putra had leased
Indomobil's assembling plant to achieve the government required
20 percent local content by the end of the first year of
operation.
"We are very confident (about achieving local content
targets). We are trying to achieve 65 percent local content
within the next 2.5 years," Tommy said.
But chairman of the Indonesian Automotive Parts and Components
Association, A. Safiun, said he doubted Timor Putra's ability to
achieve the 20 percent local content by October, the end of the
first year.
He said the 39 local vendors contracted by Timor Putra would
not be able to supply parts to the company until the end of the
year.
Tommy said that Timor Industri Komponen, a Timor Putra
subsidiary, was currently building in-house components, mainly
stamping and machining, to meet the 20 percent requirement.
The government in February last year granted duty and tax
exemptions to Timor Putra as the sole producer of the so-called
national car on the condition that the car had a 20 percent local
content by the end of the first year, 40 percent by the end of
the third year and 60 percent by the end of the third year.
Timor Putra was then licensed to import up to 45,000 fully
assembled cars from South Korea's Kia Motors Corp until its West
Java assembling plant is built.
Timor Putra has so far imported 22,000 cars.
The policy has drawn widespread international criticism.
Japan is currently seeking the World Trade Organization's
(WTO) arbitration over the national car policy, saying Indonesia
has breached international trade rules.
The European Union has said it will follow Japan's lead next
week.
Impact
Soemitro Soerachmat, president of PT Timor Distributor
Nasional -- another Timor Putra subsidiary -- said the WTO
dispute settlement issue was affecting the sale of Timors.
He said Timor Distributor had sold around 14,000 cars since
October, or 2,000 a month, far below its initial 4,000 cars a
month target.
Tommy said his company would go public next year to increase
equity financing in the national car program.
"We plan to go public in 1998 ... we are now making
preparations," Tommy said.
He said would not ask for special treatment from the Capital
Market Supervisory Agency for the initial public offering.
He said the firm planned to raise $690 million from domestic
banks, as international banks had canceled their loan commitments
following complaints to the WTO about the car policy.
"International banks backed off because of the WTO case,
probably because of pressure from their governments," Tommy said,
adding that the foreign banks had included European and Japanese
banks.
Tommy said that as PT Timor needed $1.3 billion to develop its
car industry "we will raise the remaining $610 million from our
own equity, operational profits and our initial public offering".
The domestic bank consortium would be headed by state-owned
Bank Dagang Negara, while the private banks include Bank Central
Asia, Bank Danamon, Bank Niaga, BDNI and Bank Umum Nasional, he
said.
"It is a commercial loan based on market rates. The loan will
mature in five years, including a grace period of two years, " he
said.
He declined to say how many banks were in the consortium but
said the number could change and the loan syndication would be
concluded within three months.
"The more banks in it the better so our sense of nationalism
is stronger," he said.
Coordinating Minister for Economy and Finance Saleh Afiff said
earlier this week that the government would slash the loan amount
wanted from domestic banks for Timor Putra, because of the
questionable sales targets set for the car.
Afiff said Timor's projected sale of 200,000 sedans by 1999
was an overestimation. He said the country's best-selling
vehicle, Toyota's Kijang van, sells just 70,000 cars a year.
Tommy said the 200,000 sales target included the sale of Timor
trucks and jeeps.
Soemitro said Timor Putra would start assembling a 2,000 cc-
engine multipurpose van by April or May next year. He said the
van would not get the tax and duty exemptions granted to Timor
sedans. (rid)