RI to finish car program by '99

RI to finish car program by '99

JAKARTA (JP): The minister of industry and trade, Tunky
Ariwibowo, said yesterday he was optimistic Indonesia's national
car program would be completed by the time the World Trade
Organization (WTO) ruled on Japan's complaint in 1999.

Tunky said the government would provide whatever assistance PT
Timor Putra Nasional needed to finish the program by 1999 when
the car should have a local content of at least 60 percent, as
the national car program requires.

"I think we can do it (by 1999), considering the improvement
in the program so far," Tunky said.

"The government, as the facilitator, will provide whatever
assistance they need, either in construction, licensing or other
aspects of the industry," he said.

Indonesia's national car program, launched in February last
year, gives duty and tax breaks to PT Timor Putra Nasional to
make sedans.

As the company has yet to build an assembling plant here, PT
Timor Putra was licensed to import 45,000 fully assembled sedans
from South Korea's Kia Motors Corp and sell them here as Timor
sedans.

Last October, Japan, the European Union and the United States
filed separate complaints with the WTO over the policy which they
say is discriminatory and violates WTO rules.

WTO panel

Japan, after months of bilateral negotiations with Indonesia,
has decided to take the issue to a WTO panel later this month.

The State Secretary, Moerdiono, said Monday that "even if the
WTO panel finally discusses the national car program at its next
meeting, the whole process will not be completed before 1999."

President Soeharto has ordered an end to bilateral
negotiations on the issue with Japan.

This means Tunky, who is leading a four-day trade mission to
Japan starting today, will not discuss the issue during his
visit.

Soeharto has also instructed Monday nine economics ministers
to coordinate efforts to implement the car program.

Economist A. Tony Prasetiantono from Yogyakarta's Gadjah Mada
University, predicted the European Union and the United States
would not follow Japan.

He also said Japan would eventually withdraw its complaint
from the WTO.

"Japan's intention to take the case to the WTO panel is not a
final decision. Considering Indonesia's strong reaction to its
move, Japan may rethink its decision," Tony said.

The Center for Strategic and International Studies' Mari E.
Pangestu said Indonesia could legally continue its national car
policy until a WTO Dispute Settlement Body panel ruled on the
case.

The disadvantage of the case going to the panel is that
Indonesia can no longer negotiate with Japan on a bilateral
basis.

"The independent panel will conduct assessments and base its
decisions on facts and WTO rules. There is no way Indonesia can
negotiate," Mari said.

But Tunky said Indonesia was ready to defend its national car
policy.

He said Indonesia had long prepared an interministerial team,
supported by lawyers, to defend the car policy at the WTO.

"Don't say we will lose. That's a pessimistic view. We have to
be optimistic. We have to face whatever comes before us, and we
will do our best," Tunky said.

But most analysts said Indonesia chance of winning was slim.

Realistic

Analyst Suhari Sargo said "politically, Tunky has to say that.
But realistically, I think it is difficult for us to win the case
at the panel.".

Mari agreed and said it was hard to say how big Indonesia's
chances were because "we don't know whether the panel will agree
to the arguments we are using to justify the policy."

Indonesia would probably use the infant industry clause and
temporary subsidy arguments against Japan's claims that
Indonesia's national car violated the WTO's non-discriminatory
and national treatment principles, Mari said.

"It's true that GATT allows such discriminatory treatment to a
certain extent and on a temporary basis. The question is, will
the panel agree that our national car conforms with the special
treatment clause?" Mari asked.

The WTO panel has between 6 months and 9 months to make a
final decision.

If Indonesia loses it can appeal.

If Indonesia loses its appeal it will have to scrap its
national car policy. (23/pwn/rid)