Timor Putra needs 5 years of protection: Businessman
Timor Putra needs 5 years of protection: Businessman
JAKARTA (JP): PT Timor Putra Nasional -- the pioneer car assembly company which has been granted import duty and luxury sales tax exemptions needs to be protected for at least five years, commissioner of the Udatinda Group Frits Hendrik Eman said yesterday.
"I believe that Timor Putra will remain the only automobile company granted the duty and tax exemptions for at least the next four to five years to allow it to grow healthily," Eman told a news conference.
The Udatinda Group -- which has 20 subsidiaries engaged in tourism, transportation, banking and automobile component manufacture -- has a 35 percent stake in PT Indauda Putra Nasional Motor, a joint venture with Kia Motors Corp. of South Korea.
The Humpuss Group, controlled by Hutomo (Tommy) Mandala Putra, owns 35 percent and Kia Motors the remaining 30 percent share in PT Indauda Putra Nasional which assembles Timor cars in Surabaya.
"PT Indauda has been assigned, for the time being, a contract to assemble Timor cars from complete knocked-down kits imported from Kia Motors," Eman said.
Timor Putra Nasional has been given pioneer status by the government and is therefore exempt from import duty on car components and the luxury tax on car sales under new regulations enacted last month.
The new rulings, consisting of a Presidential instruction, a government regulation and a decree by the industry and trade minister and finance minister were enacted on Feb.19 but were announced on Feb. 28, two days after Tommy launched the Timor sedan prototypes.
On account of the tax exemptions Timor cars can be sold at half the price of Japanese makes of the same class (1,600 cc engine displacement capacity).
In a related development, the association of car assemblers said that its members had postponed the equivalent of hundreds of millions dollars in investment in car production, waiting for the impact of the new automotive industrial policy.
Herman Latief, chairman of the association, said on Monday that the car assemblers first wanted to see the developments in the market after the launching of the Timor cars.
Astra International, the largest car company, has decided to postpone an investment of Rp 1.2 trillion ($518 million) and Indomobil, the second largest assembler, shelved its Rp 600 billion investment programs.
Eman rejected the fear that the existing car assembly companies which do not enjoy the duty and tax exemptions would go bankrupt due to the fierce competition from Timor cars.
He acknowledged that he had heard news of possible a threat by Japanese auto makers who might retaliate against what they see as a discriminative policy.
However, he said, it would be out of proportion for the Japanese automobile companies, which have dominated the domestic car market for many years, to retaliate against the new national automotive industrial policy.
"Timor Putra will procure components for its Timor cars from many different sources," he added. (kod/vin)