Timor car 'becomes official govt sedan'

JAKARTA (JP): The Timor car has been the government's official sedan for officials and state company executives since April, State Minister for National Development Planning Ginandjar Kartasasmita confirmed yesterday.

Ginandjar told reporters before the monthly limited cabinet meeting on economic affairs, that the ruling was stipulated in a directive issued by the finance ministry's Director General of Budget and the National Development Planning Agency.

"The ruling is in the directives set for the 1997/1998 state budget implementation beginning in April", he said.

These directives serve as guidelines for government purchases of goods and services for the current fiscal year, covering such matters as the standards and technical specifications of operational vehicles for use in development projects.

"For this year, the budgetary directives include a ruling that if government offices need passenger cars for official use, they must buy national cars, which is the Timor sedan," Ginandjar said.

Earlier Tuesday, Minister of Industry and Trade Tunky Ariwibowo said government offices and state-owned firms would soon be required to buy Timor sedans to prop up the national car's slumping sales.

But Ginandjar said yesterday that the ruling had already taken effect with the beginning of the 1997/1998 fiscal year.

Ginandjar said the ruling was based on the understanding that the government -- which included state firms owned by provincial and regional administrations -- should naturally support a national program it had designed.

"The government, as a buyer, should naturally buy a vehicle which it has deemed the national car," he said.

The national car program, launched in February 1996, grants tariff and luxury sales tax exemptions to national cars on condition that their local content rises to 60 percent in three years.

However, only a joint venture between PT Timor Putra Nasional, headed by Hutomo Mandala Putra, President Soeharto's youngest son, and South Korean Kia Motors, qualified to produce national cars until 1999.

Ginandjar said not all government institutions would be required to buy Timor sedans.

"If government offices and state firms have not budgeted to buy sedans, they need not buy Timor cars. But if they have, then they must buy the national car," he said.

Ginandjar refused to say how much the government would be spending on sedans in the current fiscal year.

He rejected the notion that the compulsory purchase of the national car violated the principle of free trade.

"The government is merely a buyer ... It has the right to buy what it wants. It's not that other makes of car cannot be bought; they can, but not by the government," he said.

"Seen from the national interest it's an advantage because the government can buy a good-quality car cheaper. Moreover, it strengthens the automotive industry -- that's the ideal target," he said.

Japan and the European Union have taken the national car policy to the World Trade Organization's Dispute Settlement Body. The United States has also protested the policy but is still trying to resolve the dispute through bilateral negotiations.

The Timor car distributor, PT Timor Distributor Nasional, claims it has had more than 25 percent of the sedan market since October, but sales have not been as high as expected even though it is about 60 percent cheaper than its domestic competitors.

The company expected to sell more than 3,000 cars a month (imported in fully assembled from South Korea's Kia Motors), but sales have been much less. In February, only about 950 Timor's were sold, down from 3,260 in January.

Timor Distributor said Tuesday its Timor S-515 sedans which were allocated for fleet sales -- or large volume sales -- to private companies, government offices and state firms made up a "very small percentage" of the total sales.

Economy

Meanwhile, information minister Harmoko said after the cabinet meeting that Indonesia's economic fundamentals were sound and stable despite upheavals during the election campaign period in April and May.

Harmoko said evidence of economic stability could be seen in last month's low inflation, the relative stability of the rupiah and the increased foreign reserves held by the central bank.

"Last April our foreign reserves were enough to buy 5.3 months of non-oil and gas imports, but now they have increased to the equivalent of 5.5 months of imports," he said.

May's inflation rate was 0.19 percent, he said. Cumulative inflation for the first five months was 2.71 percent, much lower than the 4.1 percent in the same period last year.

Harmoko said that at the end of April, money supply stood at Rp 64.58 trillion (US$26.47 billion).

Indonesia's March trade balance ended with a surplus of $243.3 million, from total exports of $4.06 billion ($960.9 million of oil and gas and $3.10 billion of non-oil and gas products) and $3.82 billion of imports. (pwn)