Tunky urges PT Timor to review its business

JAKARTA (JP): Minister of Industry and Trade Tunky Ariwibowo has urged PT Timor Putra Nasional to assess whether its business is still commercially feasible.

Tunky said yesterday he has called on the car import company, which until last month had received tax and duty exemptions from the government, to consolidate its project due to the sluggish economy.

"Considering the recent lifting of the tax exemption for the car project and the current monetary condition, we suggest PT Timor consolidate its project and review the commercial feasibility of its business," he told legislators at the House of the Representatives.

The economic turmoil, which has seen the rupiah drop about 75 percent in value against the U.S. dollar, has reduced people's purchasing power and lowered market demand for sedans, he said.

The government dismantled tax incentives provided for the Timor car project on Jan. 15 as part of reform measures made in exchange for the US$43 billion bailout arranged by the International Monetary Fund (IMF).

PT Timor, controlled by President Soeharto's youngest son Hutomo Mandala Putra, was the sole recipient of import duty and luxury tax exemptions in the country, driving the retail price of its cars down by 60 percent over other cars in Indonesia.

The company imports fully built sedans from South Korea's Kia Motors Corporation and plans to locally manufacture the cars at its assembly plant under construction in Cikampek, West Java, slated for completion in mid-1999.

PT Timor is also currently building a components manufacturing plant at the location.

Tunky said PT Timor has completed 47.59 percent of its assembly plant, which includes a welding shop, paint shop and an assembly line. The components manufacturing plant was 26.03 percent completed, he said.

Tunky said PT Timor has 15,000 unsold cars in stock, and that it was not yet clear whether the cars would be exempted from the import duty and luxury taxes.

"I am having discussions with the finance minister (Mar'ie Muhammad) over whether these 15,000 cars will be exempted from the taxes like those imported with them," he said. (das)