Toyota Astra asks for more incentives

Toyota Astra asks for more incentives

JAKARTA (JP): The government was urged yesterday to grant
additional incentives to manufacturers of commercial vehicles in
a bid to accelerate the development of the local components
industry.

Rudyanto Hardjanto, president of PT Toyota-Astra Motor -- a
joint venture between Toyota Motor Corp. of Japan and PT Astra
International of Indonesia -- suggested that the government
should reduce the luxury sales tax on commercial vehicles which
bear at least local components of 60 percent.

"We get duty free facilities for our Kijang vans as Kijang's
local components have exceeded 40 percent. But no additional
incentives are available for us even if we increase the local
content to 60 percent," Rudyanto said after witnessing the maiden
export of his company's 1800-cc 7K-type engines to Taiwan and the
Philippines.

Commenting on Rudyanto's suggestion, Minister of Industry and
Trade Tunky Ariwibowo said yesterday that his office is ready to
adjust regulations to the businesses' needs.

"We haven't closed the possibility of modifying regulations.
However we need to observe the effectiveness of such regulations
first and look into companies benefiting from the regulations,"
Tunky said after officially launching the export of the 1800-cc
engines to the two countries.

Toyota Astra Motor has exported its engines for commercial
vehicles since 1989 to Malaysia and Toyota's home country Japan.
Up to last year, it had collected US$219.04 million from engine
exports.

Rudyanto said Toyota Motor Company has decided to fully
relocate the manufacture of its 1.8-liter car engine to Toyota
Astra Motor.

"That means that Toyota Motor Company and other Toyota
subsidiaries or affiliates around the world will procure 1,8-
liter Toyota car engines from our plant," Rudyanto noted.

Meanwhile, Toyota Motor Company announced in Tokyo yesterday
that it would begin importing 1.8-liter engines from Indonesia
later this year.

"It will be the first time Toyota will buy a major component
for its domestic manufacture from its overseas ventures," a
Toyota executive said in Tokyo.

Toyota Astra plans to book Rp 99 billion (US$42.4 million) in
revenues from engine exports alone this year and Rp 150 billion
next year.

Rudyanto said that his company has planed to increase the
local content of its Kijang vans, the best selling vehicle in the
country, to 60 percent from almost 50 percent at present.

Under the government's 1993 automotive deregulation measures,
commercial vehicles which have reached 40 percent local content
are granted import tariff breaks for the remaining components and
a luxury tax cut from 35 percent to 20 percent.

Sedans have to reach a local content of at least 60 percent,
to get such incentives.

The government abruptly changed the 1993 policy in February by
granting a new company, PT Timor Putra National, controlled by
President Soeharto's youngest son Hutomo Mandala Putra, tariff
and tax exemptions to develop what the government calls a
national car, with a local content of up to 60 percent within
three years.

The government also has decided that Timor Putra will be the
only company granted such tariff and tax breaks for the next
three years.

Effect

Rudyanto said the government's newest automotive policy has
affected his company accordingly. The company has cut its vehicle
production by 30 percent due to the declining demand.

Last year, Toyota Astra Motor sold 97,892 vehicles, or 25.26
percent of the total national vehicle sales of 387,541 units.

However, Rudyanto noted that the new policy is not the only
reason for the current slump in automotive demand. The recent
heavy floods in the city and the government's tight fiscal
policies are also responsible for the declining demand.

"We are adjusting ourselves (to the new policy) and trying to
further develop our business," Rudyanto said.

He noted that Toyota is still committed to increasing its
investment here, especially for the commercial vehicles.

Meanwhile, State Minister for National Development Planning
Ginandjar Kartasasmita expressed his belief yesterday that the
latest automobile policy, which has been criticized as
discriminative by Japanese car makers, would not change Japan's
foreign aid policy towards Indonesia.

"I'm convinced the issue will not affect Japan's aid to
Indonesia. I recently met with a visiting Japanese aid delegation
but it did not give any indication that the issue would affect
development cooperation between the two countries," Ginandjar was
quoted by Antara as saying.

Japanese Ambassador to Indonesia Taizo Watanabe said recently
that Japan objected not to the Indonesian national car policy but
to the manner of its implementation which he saw as lacking in
transparency, equity and fairness. (rid)