U.S. automakers question govt's ban on luxury cars

JAKARTA (JP): The United States Automotive Trade Policy Council said on Thursday international automakers were concerned by Indonesia's recent decision to reimpose a ban on the import of luxury vehicles.

Stephen J. Collins, president of the council which groups American automakers DaimlerChrysler, Ford Motor Company and General Motors, said foreign automakers also questioned the government's plan to revive its national car project.

He said banning the import of luxury cars and reviving the national car project were inconsistent with the country's own commitment to liberalize its automotive industry.

"We are going to meet with government officials to seek clarification on why it is being inconsistent with the World Trade Organization's rules on open markets, which Indonesia is very aware of," he told The Jakarta Post after meeting with local auto parts producers.

The purchasing manager for DaimlerChrysler in Southeast Asia, Gerhard Mueller, said foreign automakers expected Indonesia to lift its ban on luxury car imports.

"We understand that Indonesia has its national interests, but we hope Indonesia will open its market and allow us to do good business together," he told the Post.

Collins said the Indonesian government had won the sympathy of the international market when it decided in mid-1999 to open its automotive market by liberalizing car imports, eliminating import duties for car components and abolishing the national car project.

"But this particular decision (to ban luxury car imports) has caused people's head to turn, because the Indonesian government had been considered as taking all the right steps so far," he said.

Minister of Industry and Trade Yusuf Kalla issued a decree last month reimposing the ban on the import of luxury vehicles in an attempt to reduce "social friction".

Ministerial Decree No. 49/2000 bans the import of automobiles which have an engine capacity of 4,000 cc and above or a price tag of more than US$40,000. The decree affects all vehicles which seat fewer than 10 people.

Kalla said that despite the government's decision in July 1999 to allow the import of completely built-up cars, the government felt it necessary to limit the import of luxury cars in order to reduce social jealousy.

He defended the policy, saying the decree in no way violated the World Trade Organization's open-market principles because it did not discriminate against any specific auto brand.

According to Collins, American automakers also are concerned by Indonesia's plan to revive the Timor national car project with Korean automaker Kia Motors.

"We already told the Indonesian government years ago that (the national car project) is a bad policy and that it has taken a poor partner," he said, referring to Kia's recent bankruptcy.

The automotive trade policy council has been opposed to Indonesia's national car program from the beginning, he said, adding that Ford, General Motors and DaimlerChrysler canceled plans in 1996 to invest about $1 billion in Indonesia's automotive industry because of the program.

"We're here now to say that Indonesia has been doing the right things ... and we want to reengage .... But try not to make any moves that do not make sense," Collins said.

Collins was commenting on the government's recent offer to Kia Motors to restart the car project, an invitation which was personally delivered by President Abdurrahman Wahid during his recent visit to South Korea.

The national car project was begun in 1996 by PT Timor Putra National, a company owned by Hutomo Mandala Putra, the youngest son of former president Soeharto. In order to support the project, the government exempted Hutomo's firm from import duties and luxury taxes for three years.

Kia, which is now owned by South Korean automotive giant Hyundai, was the sole provider of the knock-down car units and technology for the project before it withdrew in 1999.

The national car program eventually failed and Hutomo's company is now saddled with around Rp 3 trillion in debt following a sharp decline in the sale of the automobiles and a disagreement with the government over alleged unpaid import duties. (cst)