RI won't offer concessions to Japan, EU over car dispute
JAKARTA (JP): Minister of Industry and Trade Tunky Ariwibowo said yesterday that Indonesia will not offer any concessions to Japan or the European Union (EU) to settle their disputes over Jakarta's national car policy.
Tunky told journalists after a hearing with House Commission VI for industry and mines that Indonesia will only present arguments on its national car policy during formal consultations with Japan and the EU under the auspices of the World Trade Organization (WTO).
"No, we will not offer anything," Tunky said when queried about Indonesia's efforts to settle the disputes. "To begin with we will only present our arguments and not concede anything."
The EU delivered its formal request for bilateral consultations with Indonesia to the latter's Geneva mission last Thursday, and Japan followed suit a day later.
The United States reportedly plans to send its formal request for bilateral consultations with Indonesia to the WTO some time this week.
The complaints were filed after President Soeharto ruled in February that producers of a "national car" would be exempted from import duties and luxury taxes, which add about 60 percent to the price of cars in Indonesia.
The exempted cars are made by South Korea's Kia Motors Corp. for Indonesia's PT Timor Putra Nasional, a company controlled by Soeharto's youngest son, Hutomo Mandala Putra.
Tunky reiterated yesterday that Indonesia is ready and prepared to have consultations with the EU, Japan and quite possibly the United States over its car policy.
Economist Mari E. Pangestu suggested over the weekend that the Indonesian government should offer compensation to Japan and the EU to settle their disputes during the consultation stage, considering Indonesia's weak arguments under WTO rules, thus avoiding a potentially damaging examination by a WTO panel.
Under WTO rules, complaints are examined by a WTO panel only if talks fail. The WTO Dispute Settlement Body clears up any further differences.
Tunky, however, disagreed with Mari's contention, saying that Indonesia has very strong arguments to maintain its national car policy, including WTO clauses related to infant industries and developing countries.
As a developing country, Tunky argued, Indonesia still has until the year 2000 to adjust its trade, industrial and economic policies to comply with WTO provisions.
After all, Japan, according to Yasuhisa Kawamura, the economic counselor at the Japanese Embassy in Jakarta, is not seeking compensation from or pursuing possible sanctions against Indonesia. What it is contesting, through the WTO, is the consistency of Indonesia's national car policy within WTO rules.
Sanctions
"Sanctions? They are not amony our options," Kawamura said last week. "And the inclusion of Japanese auto firms in the current national car policy might not solve the problem either because what we are contesting is the consistency of the national car policy within WTO rules."
Meanwhile, a number of the commission's legislators expressed their dissatisfaction yesterday over the government's explanation of the on-the-road prices of Timor cars, made by Kia Motors but deemed to be Indonesia's national car.
Duty- and luxury tax-free Timor cars sell in Indonesia from Rp 35.75 million (US$15,277) each.
The commission asked the government for an explanation on why the Timor, which is identical to Kia's Sephia model, is sold here for more than $15,000, while Kia's Sephia is sold for just US$8,000 in the United Sates.
The government explained that the imported Timor cars are still burdened with 10 percent value added tax, 2.5 percent import tax as well as insurance, on top of freight costs and the company's margin.
"It's strange because in the United States, which also imposes a number of taxes on the sales of imported cars, the price of the Sephia is only $8,000, but Timor here is Rp 35 million. I don't understand this. By our calculation, the Timor should sell for around Rp 20 million to Rp 25 million," said legislator Djamaludin Waly, of the United Development Party (PPP).
Yusuf Rizal Tjokroaminoto, Royani Haminullah and Soenaryo Haddade, Commission VI legislators from the PPP, Indonesian Democratic Party and Golkar factions respectively, all expressed similar surprise and dissatisfaction during the hearing.
Responding to legislators' questions on the Timor's price, Tunky said that the government does not set the retail price of Timor cars. "It is Timor Putra's right, not the government's, to decide it," he said. (rid)