Timor car unlikely to hit the road in September

Timor car unlikely to hit the road in September

JAKARTA (JP): The production of the controversial national car is unlikely to meet the initial schedule of September this year as two automotive groups which had been asked to assemble some of the parts are not ready.

Indomobil, the automotive division of the widely diversified Salim Group, said it has no idle assembly facilities for the national car.

And Astra, the country's largest automotive group, is also unable to start work on time, saying that a new facility should be built for the project.

The production of the national car has been assigned to PT Timor Putra Nasional, a company controlled by President Soeharto's son Hutomo Mandala Putra (Tommy). However, because Timor Putra has yet to build its own assembly plant, it has asked Indomobil and PT Astra International to assemble the national car, which will be called Timor.

Japanese automotive makers, which mostly manufacture and sell their automobiles in Indonesia through the two above companies, have sharply criticized the national car project.

The Japanese car industry, which currently dominates the automotive market in Indonesia, said recently that it wanted to take the car issue to the World Trade Organization (WTO).

Unlike their Japanese principals, Astra and Indomobil have not explicitly criticized the project. However, their reluctance to immediately take the order to assemble the national car apparently reflects their opposition to Timor Putra.

In February, the government granted pioneer status to Timor Putra to produce the so-called national car with Kia Motors of South Korea, thereby enabling the company to receive a series of tax breaks including the exemption from import duties and luxury sales tax.

The tax incentives will enable Timor Putra to sell its cars at half the price of Japanese makes of the same class (with an engine of 1,600 cc). Sedans are normally subject to 100-200 percent import duties and luxury tax rates of 25 percent to 35 percent.

During the initial stages of its operation, Timor Putra will import all components from South Korea's Kia and assemble them here.

Soebronto Laras, the president of Indomobil, said that his company would only be able to provide workers and "a place to work" for Timor Putra.

"Timor Putra should provide us with an assembly facility, then we will do the job," he was quoted yesterday by the Bisnis Indonesia daily as saying.

Palgunadi T. Setiawan, a senior executive of Astra Group, said that it would take at least nine months to prepare assembly facilities for Timor Putra.

He acknowledged that Astra and Timor Putra have yet to discuss technical aspects of assembling the national car.

"But it's clear that for the time being, Astra has no idle workers," he said. "It means that the existing workers could not be employed to help Timor Putra."

He also said that Astra would not make additional investments in building assembly facilities for Timor Putra.

Hutomo acknowledged last week that the implementation of the national car project has not been as smooth as expected because Timor Putra's assembly facilities are not yet ready.

He said, however, that the problem would not affect the production schedules as the cars would be, instead, assembled by Astra and Indomobil Groups, the Indonesian partners of Japanese car manufacturers.

The national cars are still expected to hit the road in September according to schedules despite the current problems, he said. (hen)