Tokyo's response to Indonesian car policy criticized

Tokyo's response to Indonesian car policy criticized

JAKARTA (JP): President Soeharto's youngest son, Hutomo
Mandala Putra, yesterday criticized Japan for its response to a
government ruling that favors his auto company.

"Why do they disagree with Indonesia's policy? Is it because
we are not using Japanese technology (in the national car
project)?" Hutomo said at the Indonesia Summit, an international
seminar on the Indonesian economy.

Hutomo, who is better known as Tommy, asked why the Japanese
government had not questioned the similar national car programs
developed by Malaysia and India.

"Is it because Proton has teamed up with Mitsubishi of Japan
that they don't complain about them," Tommy asked. "The same has
happened with India, which is cooperating with Suzuki. So, there
are business interests."

Jakarta announced in February import duty and luxury tax
exemptions for fully-Indonesian car producers. The exemptions,
for the time being, apply to only one company, Tommy's PT Timor
Putra National.

Teaming up with Kia Motors Corp. of South Korea, Timor Putra
is developing a sedan under the Indonesian brand name Timor,
which will be ready for showrooms by September.

The Japanese government has argued that Jakarta's policy
breaches World Trade Organization (WTO) rules. Jakarta said that
it studied WTO regulations before announcing the policy.

Japanese and Indonesian officials completed two days of talks
here last month on Indonesia's automotive policy. Another round
of talks is scheduled in Tokyo for later this month.

A.R. Ramly, chief commissioner of PT Astra Internasional,
Indonesia's largest producer of Japanese automotive vehicles,
said that his Japanese partners, though deeply concerned with the
new policy, will not reduce their automotive investments here.

Aid

Meanwhile, a senior official at the Japanese foreign ministry
told Gatra's correspondent, Seiichi Okawa, in Tokyo last week
that Japan will not tie its aid to Indonesia to the auto row and
that Japan will not reduce its aid to Indonesia this year.

Minister of National Development Planning Ginandjar
Kartasasmita last week went to Japan to ask the Japanese
government not to reduce its aid to Indonesia.

Japan remains by far the single largest aid donor at the World
Bank-led Consultative Group on Indonesia (CGI), which has
provided Indonesia with nearly US$5 billion in assistance each
year since 1992.

"The CGI aims to help Indonesia's economic development. So we
think that discussions on the CGI must be carried out separate
from those on Indonesia's national car policy. In other words, we
should not relate the Timor car issue to the CGI issue," the
Japanese official said.

Tommy said yesterday that Timor Putra has teamed up with South
Korea's Kia, not with a Japanese auto firm, because Kia is the
only auto firm which can offer licensing and technology transfer
to his company.

Tommy also accepted the challenge of his older brother,
Bambang Trihatmodjo, who is chairman of the Bimantara Group, to
compete in the development of national cars.

"It's good. It's all right in business. We can compete," Tommy
said in response to Bambang's plan to develop a national car
under the brand name of Bimantara.

Ideally there should be two or three auto firms assigned to
develop a national car, Tommy added.

Tommy did not rule out the possibility of forming a consortium
of auto firms to build a national car. "But we need to look into
it very closely before we can form such a cooperation."

He noted that his company could cooperate with existing car
assemblers such as Astra International, the Indomobil Group and
PT Krama Yudha Tiga Berlian.

"We involve all parties which have industrial components,"
Tommy said, adding that his company will be able to meet the
local content requirement of 60 percent in the third year of
operation as stipulated by the government.

A number of parties, including Ramly, questioned the ability
of local auto component producers in supporting PT Timor Putra
Nasional.

"Local content development in Indonesia faces a number of
problems, including a small economic scale," Ramly said, adding
that Indonesia currently has 77 brands of automobiles with a
total combined production of 480,000 vehicles.

Responding to those skeptical of his company's ability to meet
the local content requirement, Tommy said, "I prefer giving
evidence to promises."

He noted that Timor Putra plans to start exporting its Timor
cars during the second year of operation. "We cannot reach our
export target in the first year."

"To start exports, we must reach a certain level of economic
scale to be competitive. Thus, we will produce as many cars as
possible," Tommy said. "How many, it depends on the capability of
the market to absorb." (rid)