Timor Putra partner backs car policy

Timor Putra partner backs car policy

JAKARTA (JP): PT Timor Putra Nasional, the only company
allowed by the government to develop a national car, stepped up
its campaign yesterday against the threat of the world's major
car producers to take the country's national car policy to the
World Trade Organization (WTO).

Fritz H. Eman, a close partner of Timor Putra's in developing
the national car, said he believed that Indonesia's car policy is
on the right track and that it is not against the WTO's free-
trade principles.

"We are sure we will win if Japan, the United States or the
Europe Union (EU) takes the national car policy to the WTO," he
told reporters.

He said that even if Indonesia loses on the "WTO battlefield",
it will not affect Timor Putra's car manufacturing program. "We
are ready to take any risk," he added.

Eman, the chairman of PT Udatimex -- a Surabaya-based company
which will assemble Timor cars from the beginning of next year --
said that the tax privileges given to Timor Putra are fair
enough, given its strong commitment to developing an independent
car industry in the country.

The tax incentives for a pioneering company such as Timor
Putra are important, he maintained. Otherwise it would not be
able to gain a sufficient market share to support its car
manufacturing program.

He questioned why the world's major car producers such as
Japan, the United States and the EU are so concerned about
Indonesia's national car manufacturing program.

"Indonesia, like other nations, wants to have its own national
car. It is natural," he said. "The world's major car producers
have, in fact, been given the chance to develop a national car
but they have no interest in doing so," he added.

Under Indonesia's new car policy, producers of a national car
are granted exemption on the import duties and luxury taxes that
add about 60 percent to the price of cars in Indonesia, as long
as the local content of their cars reaches 20 percent by the end
of the first year and 60 percent by the end of the third year of
production.

Timor Putra, controlled by President Soeharto's son Hutomo
Mandala Putra, is producing the car in cooperation with South
Korea's Kia Motors. It is allowed to import the car from Kia
until the firm's own production factory becomes operational in
1998.

Around 4,000 of the so-called national cars have arrived here
from South Korea.

The Timor is to be sold for a minimum of Rp 35 million (around
US$15,000), about half the price of Japanese sedans of the same
class. Kia sells the same car overseas, including in the United
States, for $8,000.

Eman said yesterday that the $7,000 difference between the
car's overseas price and its local price would be used to cover
costs and also to build the company's own factory.

Eman said that Timor Putra will be able to sell a maximum of
20,000 cars per annum, about 30 percent of the country's annual
demand for sedans.

"Timor will not eat up all the car market so why should other
car producers be so worried," he said.

Minister of Trade and Industry Tunky Ariwibowo said Monday
that Indonesia would not offer any concessions to Japan, the
United States or the EU to settle their disputes over Jakarta's
national car policy.

"We will not offer any thing. To begin with we will only
present our arguments and not concede anything," Tunky said.

Eman said yesterday that he supported the government's
consistency in developing the national car program and that Timor
Putra should meet the existing local content requirements. (hen)