RI ready to face Japan's indictment over car policy

JAKARTA (JP): Indonesia will not change its national car policy and is ready to face any moves Japan makes toward taking the issue to the World Trade Organization (WTO), Minister of Industry and Trade Tunky Ariwibowo said yesterday.

After addressing a seminar here on the promotion of the utilization of local products Tunky said: "We're ready to discuss it before the WTO. We'll explain the background of the policy."

Japan's Deputy Minister of Industry and Trade Tsutomu Makino told a press conference in Tokyo on Monday that Japan will take Indonesia to the WTO as soon as it can confirm that cars imported from South Korea have received preferential treatment.

He said the Indonesian policy of giving preferential import tariffs to South Korea -- due to its support of the national car policy -- is clearly against WTO principles.

The discrimination will result in the South Korean cars being cheaper than other cars, including those from Japan, Makino stressed.

Through the national car policy the Indonesian government is providing tariff and tax breaks to PT Timor Putra Nasional to produce 1,500 CC sedans under the local brand name of Timor. The private company which is cooperating with Kia Motors Corp. of South Korea is owned by President Soeharto's youngest son Hutomo (Tommy) Mandala Putra. Because Timor Putra's production facilities are not yet ready, the company is being allowed to import cars from Kia without paying import duties and luxury sales tax for the first year.

"The policy is very important to strengthen our automotive industry. We want to become a self-reliant country and tap the potential of our domestic market. That's our reason," Tunky said yesterday.

According to the minister there are WTO rules that can be implemented gradually. Indonesia's car policy, therefore, is in line with the WTO's principles.

He said that Indonesia will hire lawyers if Japan takes the case to the WTO.

"But actually we have been pursuing a peaceful way of solving the conflict," he noted.

No panic

Minister/State Secretary Moerdiono said yesterday that Indonesia will not panic in facing the Japanese threat to take its car policy to the WTO.

"Indonesia and Japan will continue to consider that their bilateral relations are paramount despite Japan's intention to go to the WTO," he told reporters here.

"We have prepared ourselves to face the case. We will hire local and foreign lawyers to defend our country in the WTO," he said.

He said that such action is not new. Since the formation of the WTO last January, 57 trade disputes have been taken to the international trade organization. Of the 57 cases, only 17 have been solved.

He said that Japan itself has faced nine indictments from other countries in the WTO. Other countries, including the United States, Canada, Australia, India, South Korea, Thailand and the European Union have also faced such indictments.

According to Moerdiono, when countries try to increase their exports, trade conflicts tend to arise. "That's why countries decided to establish the WTO," he said, adding that taking the case to the WTO could result in a fair solution. (13)

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