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)