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)