Tommy has no plan to quit Timor car

JAKARTA (JP): Former president Soeharto's youngest son Hutomo Mandala Putra will maintain his ownership of Putra Nasional (TPN) despite the demand made by Kia Motor, his Korean partner, to remove him from the debt-laden car company, his aid, Suharto, said here on Monday.

Suharto, also the commissioner of the company, said on Monday that Hutomo, who is better known as Tommy, had so far not mentioned any plan to leave his troubled company.

"His commitment to the company remains strong. He's determined to bring the company out of the problems and turn it into a better one," he told journalists on the sidelines of a hearing between TPN's management and House Commission V in charge of trade and industry.

TPN president Sudjaswin E.L. said Tommy's presence in the company posed no barriers to restructuring the company's debts with the Indonesian Bank Restructuring Agency (IBRA).

"Not at all. I don't think Tommy's existence causes problems to the company. Besides, there's no law that says he must leave the company under these circumstances," he said.

Minister of Trade and Industry Luhut Panjaitan earlier said that South Korea's Kia Motor prepared to resume the stalled Timor assembling project if the government bailed out the company and removed Tommy from the company.

Sudjaswin denied reports that Kia had demanded that Tommy, who still controls 99.9 percent of TPN, to pull out of TPN as a concession of its return to the company.

Sudjaswin said Kia recently told TPN's management that it was committed to returning to TPN's car project with or without Tommy as soon as TPN completed its debt restructuring program with IBRA.

TPN was put under the control of IBRA after the company failed to settle its debts of about US$127.8 million to state owned banks.

Sudjaswin said the company was near to completing its debt restructuring program with IBRA.

"We expect to complete the program this month," he said.

TPN, which was set up in 1996 to develop the national car program, was exempted from import duty and luxury tax payment for three years on the condition that the local content reach at least 20 percent in the first year of the program, 40 percent by the end of the second year and 60 percent by the end of the third year.

TPN's exclusive tax treatment was, however, unraveled in early 1999 due to protests from Japanese and U.S. car makers.

The removal of the tax facilities caused a sharp decline in the company's so-called national car, which was simply the Indonesian version of the Korean-made Sephia car.

The company said it had, until Apri last year, sold 31,458 units out of the total 39,715 units imported from Korea since 1996.

Sudjaswin said TPN expected that Kia, when it returned to the car project, would inject some funds to help finance the completion of TPN's abandoned car assembly and manufacturing plant in Cikampek, West Java.

"We need about $131 million to complete the plant development. We intend to provide 70 percent of the funds and expect Kia to provide the rest," he said, adding that the plant was expected to be ready in July and start production activity in August.

The plant is expected to start a full manufacturing next year, with a production capacity of 15,000 cars, he said. (cst)