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)