RI asks KL to buy more automotive components

Adianto P. Simamora, The Jakarta Post, Jakarta

The government is negotiating with its Malaysian counterpart demanding the latter country to buy more automotive components from Indonesia, as compensation for a delay in the opening of Malaysia's car market.

Director general for metal, machinery, electronics and miscellaneous industries, Achdiat Atmawinata, said on Wednesday that the delay had caused Indonesia to suffer a potential loss of US$750 million until 2005.

"We want Malaysia to buy more automotive components from Indonesia as a compensation for the (potential) loss," Achdiat said.

He said that the Indonesian team, which consists of government officials and executives from the Indonesian Automotive Parts and Components Manufacturers Association (GIAMM) had met twice with the Malaysian counterpart.

Indonesia and Malaysia are among the six original members of the Association of Southeast Asian Nations (ASEAN), which slashed import tariffs to between zero and 5 percent following the implementation of ASEAN free trade area (AFTA) earlier this year.

The other four original ASEAN members are Thailand, Singapore, Philippines and Brunei Darussalam.

But Malaysia has delayed the opening of its automotive sector until 2005 in a bid to protect its national car project, said Proton, from imported cars from Indonesia and Thailand.

The three countries (Indonesia, Thailand and Malaysia) are the only ASEAN members which manufacture cars.

Indonesia and Thailand have agreed to include their automotive products in line with the AFTA scheme.

As a compensation for the delay, however, both Indonesia and Thailand are allowed to ask for special compensation from Malaysia.

Achdiat urged the Indonesian automotive component producers to maintain quality to win more overseas markets.