RI continues car talks with Japan, EU and U.S.

RI continues car talks with Japan, EU and U.S.

JAKARTA (JP): Minister of Industry and Trade Tunky Ariwibowo
said yesterday Indonesia was continuing to negotiate with Japan,
the European Union and the United States outside the dispute
settlement panel of the World Trade Organization (WTO) over its
controversial car policy.

"We have not yet stopped negotiations with any of them. The
panel process will last a very long time. Who knows, maybe we can
reach an agreement before the final process (of the panel)," said
Tunky after opening an Asia-Pacific seminar on textiles.

Tunky was commenting on the WTO's decision Wednesday in favor
of a U.S. complaint about Indonesia's car policy, ruling for the
dispute to be settled by a panel set up to consider similar
complaints by the European Union (EU) and Japan.

A panel set up on June 12 by the WTO's Dispute Settlement Body
(DSB) would examine the U.S. request, trade officials said in
Geneva Wednesday.

The WTO established the panel to look into EU and Japanese
complaints that Indonesia's national car policy violated open
trade.

Approval of the U.S. request for a panel was automatic under
WTO rules since Indonesia blocked Washington's first formal
demand last month at the DSB. A country has the right to hold up
the creation of a panel the first time it is sought.

The panel has six months to come up with a ruling.

Informed sources were quoted here by Antara as saying
yesterday that Indonesia had approved the membership of the panel
which consists of judges from New Zealand, Norway and Egypt.

The Indonesian government granted Timor Putra Nasional --
owned by President Soeharto's youngest son Hutomo Mandala Putra
-- exclusive rights to manufacture a so-called "national car"
last year. It is currently cooperating with South Korea's Kia
Motors Corp. to produce the cars.

Fully assembled Sephia sedans -- renamed Timor -- are
presently imported from South Korea because Timor Putra's
production facilities are still being built.

The national car receives import duty and luxury tax
exemptions, making it cheaper than other cars of similar type on
the domestic market.

The government has ordered a consortium of 13 banks, led by
state-owned Bank Dagang Negara, to help finance Timor Putra's
manufacturing facilities but the loan syndication has not yet
been realized.

In a related development, PT Timor Industri Komponen, which is
to supply Timor Putra with components, signed Wednesday in
Bangkok a joint venture agreement with PT Amalmas Wibawa Agung of
Indonesia, Oriental Summit Industries Sdn. Bhd. of Malaysia, and
Thai Summit Auto Parts Co. Ltd. of Thailand to build a car
component manufacturing plant in Cikampek, Indonesia.

PT Amalmas Wibawa Agung said in a statement to The Jakarta
Post yesterday that the consortium would invest US$60 million in
the plant with Timor Komponen having a 20 percent equity in the
plant, Amalmas Wibawa 10 percent, Oriental Summit 30 percent and
Thai Summit 40 percent.

At the signing ceremony were, among others, Thailand's Prime
Minister Gen. Chavalit Yongchaiyudh, Indonesian Minister of
Investment Sanyoto Sastrowardoyo and Indonesian Ambassador to
Thailand Isbandi Gondo.

Chavalit said in his speech that the joint venture agreement
proved that the private sector contributed to the cooperation
among the countries grouped in the Association of Southeast Asian
nations (ASEAN).

"Hopefully, this joint venture will become an inspiration and
create a stronger cooperation among ASEAN members in other
sectors," Chavalit said.

ASEAN is made up of nine countries: Indonesia, Malaysia,
Singapore, the Philippines, Thailand, Brunei, Vietnam, Myanmar,
and Laos.

Amalmas said the component plant would produce 11 kinds of car
components for Timor cars and jeeps. It is expected to start
production late this year.

Timor cars should have a 20 percent local component by the end
of the first year of production -- which falls in October -- 40
percent by the second year and 60 percent by the third year.

An economist from the University of Indonesia, Faisal H.
Basri, was pessimistic about Timor's ability to meet the 60
percent local content after three years of production, because of
the small capacity and ability of Indonesia's car component
industry.

"I am not sure Timor is ready to stand on its own after three
years of production," Faisal said. (jsk)