WTO forum not expected to discuss RI's car policy

JAKARTA (JP): The dispute between Indonesia and Japan over the former's national car policy is not scheduled to be discussed at the ministerial conference of the World Trade Organization (WTO) in Singapore this December, according to a WTO executive.

"Individual disputes are not likely to be discussed at the meeting," the organization's deputy director general, Anwarul Hoda, said yesterday.

Hoda is here to attend a three-day Asia-Pacific senior officials meeting, which started yesterday, in preparation for the WTO ministerial meeting.

He refused to comment on Indonesia's car policy but noted that Indonesia is not alone in pursuing an automotive initiative which concerns other countries. He cited Brazil and the United States as another example.

"You know that the dispute is there and some parties are expressing concern and it is not wise for the (WTO) secretariat to give any position... or to give its views on whose position is strong and on whose position is weak," Hoda said.

When asked if Japan had filed the case with the WTO, Hoda replied: "When I left Geneva yesterday, there had been no formal move from Japan."

Japan, which controls more than 90 percent of the Indonesian auto market, has criticized Indonesia's auto policy as discriminating against foreign firms and has threatened to take the case to the WTO if Indonesia does not modify the policy.

Under the policy, introduced last February, producers of a national car are granted exemption from import duties and luxury sales taxes that add about 60 percent to the price of a car.

PT Timor Putra Nasional -- a company controlled by President Soeharto's youngest son Hutomo "Tommy" Mandala Putra -- was picked as the first national car supplier and is required to ensure the cars' local content is at least 60 percent by the end of the third year of production.

In a joint venture with Kia Motors Corp. of South Korea, Timor Putra is allowed to import its cars from South Korea for one year, until its own assembly facilities are ready.

Some 2,000 cars made by Kia arrived at the Tanjung Priok port in Jakarta last week.

The importing of the cars, however, has been messy. They arrived without bank guarantees, as required by the government. In the absence of the guarantees, the government has not allowed the cars to clear customs.

The cars are currently being stored at a private entrepot in Cengkareng, close to Soekarno-Hatta international airport.

Director General of Customs and Excise Soehardjo Soebardi claimed yesterday that his office had never been formally informed about the importation of the duty-free cars.

Bilateral

Minister of Industry and Trade Tunky Ariwibowo said yesterday that he would prefer to solve the dispute with Japan bilaterally rather than seeing the issue taken to the WTO.

He said he will discuss the national car policy with his Japanese counterpart Shumpei Tsukahara later this month, when the latter is due here for a meeting of economic ministers from Japan and the Association of Southeast Asian Nations.

"It is an opportunity to discuss the national car issue again," Tunky told journalists before the monthly full cabinet meeting.

However, Tunky said, if Japan insists on taking the case to the WTO, Indonesia will be fully prepared. He believes that Indonesia has not violated any trade agreements.

Indonesian Minister/State Secretary Moerdiono said Tuesday that should the matter be brought to the WTO, he hoped the international body would conduct "fair arbitration."

"All along, Indonesia has intended to produce a national car," Moerdiono said, adding that "we do not see any reason to change this policy."

Meanwhile, economist Mari E. Pangestu was pessimistic yesterday over whether Indonesia could win the case if it goes to the WTO.

Japan argues that Indonesia is breaching most-favored nation principles by allowing duty-free imports of cars from only South Korea. However, Indonesia contends that, as a developing country, it has the right to protect its infant industry.

"In terms of our infant industry argument, we have to prove that our 20-year old auto industry is still an infant. That's not easy," Mari said.

Tommy said in a statement yesterday that he believes Japan's threat to take Indonesia to the WTO will not materialize.

"The threat of taking the national car policy to the WTO will only be a matter of talk. Why don't the Japanese auto firms fully manufacture cars in Indonesia rather than wasting their time talking about the WTO," Tommy said. (rid)