S. Korea's KIA reenters Indonesian car market

JAKARTA (JP): South Korea's Kia Motors is reentering the Indonesian car market through a new joint venture called PT KIA Mobil Indonesia.

KIA Mobil president commissioner AM Hendropriyono said on Thursday that the company was entering the already crowded domestic car market with five new car models.

"We're ready with after sales service centers in 22 cities in Indonesia, and are targeting to get between 8 and 10 percent of the market next year," he said at a media conference.

Hendropriyono, an Army lieutenant general, said the company was allocating some US$20 million in initial investment.

He said that once the targeted market share had been attained, the company would build a manufacturing plant in Indonesia.

The company will initially import assembled cars from South Korea, he said.

Hendropriyono declined to mention the composition of the share ownership in the new venture.

KIA Mobil expects the domestic car market to grow by 50 percent this year on the back of signs of improving domestic economic and political conditions following the democratic presidential election in October.

KIA's first attempt to enter the Indonesian car market was in 1995 through controversial joint venture PT Timor Putra Nasional, which was co-owned by former president Soeharto's son Hutomo "Tommy" Mandala Putra.

Timor received various government facilities including tax exemptions on the grounds that the company would produce the first national car with a large local content.

But the joint venture did not go well as the company was saddled with huge debts following the economic crisis that started in the middle of 1997 and the fall of Soeharto in May last year.

Timor is now in the hands of the Indonesian Bank Restructuring Agency (IBRA) after its bank lenders transferred the company's debts to the agency.

Hendropriyono said that KIA Mobil was a completely new joint venture without any link to the previous KIA venture. (rei)