Timor car may cost government US$900 million
Timor car may cost government US$900 million
JAKARTA (JP): The government will lose at least Rp 2.1
trillion (US$900 million) in revenues during the next three years
from its granting of tax and tariff breaks to PT Timor Putra
Nasional, according to the Association of the Indonesian
Automotive Industry.
The association's secretary general, F. Soeseno, told a
seminar on the national car program yesterday that the assumption
behind the calculation is that Timor Putra will sell 150,000
sedans during the next three years.
"Such deficits borne by the government will be compensated by
the availability of 150,000 cars with the Indonesian brand-name
Timor sold cheaply," Soeseno said.
To ensure the Timor car's success, Soeseno calculated that the
government has to provide at least US$750 million in foreign
exchange for the importing from South Korea of the required
components, with an assumption that the components for one car
cost Timor Putra $5,000.
"It does not include additional foreign exchange needed to
import capital goods for Timor Putra's production facilities,"
Soeseno said.
Timor Putra, controlled by President Soeharto's youngest son
Hutomo Mandala Putra, is the only company to have been awarded
tax and tariff breaks to develop a sedan under the brand-name
Timor. It is operating in cooperation with Kia Motors Corp. of
South Korea.
Timor Putra has said that the Timor car will be available in
show rooms by September and sold at Rp 35 million each, or half
the price of Japanese sedans of the same type.
Soeseno projected that the presence of Timor cars will greatly
influence the market.
He said the sales of automotive vehicles are forecasted to
reach 370,000 units, 7.5 percent less than the projection of
400,000 units made last year.
Last year, sales of vehicles reached 350,000 units.
"Some people will postpone their plans to buy vehicles,
waiting for the Timor car, which will be very cheap," Soeseno
said.
Demand
He also said that some people and institutions will probably
cancel their orders with existing car dealers. There is a
possibility that there will be a shift in demand from vans to
Timor sedans.
Meanwhile, Sri Mulyani I. Sumartono, an economist at the
University of Indonesia, disagreed with Soeseno, saying that the
demand for cars other than Timor will remain high.
She argued that rich people will maintain their tastes.
Meanwhile, most Indonesians live with extended families and thus,
they need multi-purpose vehicles, including vans.
"My survey revealed that most families prefer multi-purpose
vans as their second vehicles," Sri said. "Only those companies
which produce sedans with prices close to Timor's will suffer."
(rid)