S. Korea's KIA reenters Indonesian car market

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)