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)