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)