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)