U.S. will boost trade with RI

JAKARTA (JP): The United States will continue to support trade ties and investment in Indonesia despite its opposition to Indonesia's national car policy.

Visiting U.S. Secretary of Commerce Mickey Kantor said yesterday that Indonesia remained a priority on Washington's foreign trade map.

He said that Indonesia, the largest country within the Association of Southeast Asian Nations (ASEAN), contained tremendous business opportunity for American companies.

"The potential for greater growth in bilateral trade is vast -- but not of course without challenge,' Kantor told a luncheon meeting organized by the American Chamber of Commerce.

He noted that the challenge did not come only from the longstanding Japanese presence in the country but also from renewed European interest in the Indonesian market.

Kantor said that Indonesia's newly announced car policy is one of "few clouds" in U.S.-Indonesia trade relations.

"For one, we are concerned about the recently announced national auto policy," said Kantor, who arrived from Seoul on Wednesday.

"Quite frankly, we believe it to be inconsistent with the spirit of APEC, which has benefited from President Soeharto's leadership, especially his crafting of the Bogor Declaration," he said.

According to the Bogor Declaration, the Asia Pacific Economic Cooperation (APEC) forum, of which Indonesia and the United States are members, aims to liberalize trade and investment by 2010 for developed members' economies and by 2020 for developing members'.

Kantor said Indonesia's "national car" policy is inconsistent with its own commitment to the World Trade Organization (WTO).

The national car program gives favored tax treatment to PT Timor Putra Nasional, which is the only company licensed by government to produce "national cars".

He said the new car policy is inconsistent with Indonesia's intention to solicit greater foreign investment from the United States and other countries.

Speaking at a press conference after the luncheon, he said: "We support open market, we support the indigenous car industry,"

He said the controversial car issue was one of many topics raised during his meetings with President Soeharto and senior officials, including Minister of Industry and Trade Tunky Ariwibowo.

Kantor said the results of the meetings included an agreement "to work together and to cooperate to make the auto policy consistent with the WTO principles."

"We will be very careful," he said when asked how the United States would help bring the Indonesian car policy in line with free trade rules.

On Wednesday, he told reporters that the United States would not contest the Indonesian car policy at the WTO.

"I haven't threatened anything, I'm here to grow relations." Washington would address the auto policy issue in an "appropriate fashion," Kantor said.

The government in February granted pioneer status to Timor Putra to produce a "national car" with Kia Motors of South Korea. This exclusive treatment gives the company incentives, including exemptions from import duties and luxury sales tax.

The tax incentives, which last three years, will enable the company to sell its 1,600 cc cars at half the price of similar Japanese models.

Timor Putra, which is owned by President Soeharto's son Hutomo Mandala Putra, will import the cars until its own assembly plant is ready in 1998.

Car makers from Japan, the United States and Europe have attacked the national car program, saying that the exclusive treatment given to Timor Putra is unfair.

Kantor said yesterday that the car policy and intellectual property rights are two areas of concern for the United State's economic ties with Indonesia.

Kantor also visited the Indonesia Air Show '96 with State Minister of Research and Technology B.J. Habibie before leaving for Thailand last night. (hen)