First Shipment of Timor Cars Arrives in Indonesia

09/03/96

Reuters reported that the first 2,000 unit shipment of Indonesia's controversial Timor national car arrived at Jakarta's Tanjung Priok port on Thursday. Kia Motors Corporation of South Korea made the cars, which will be sold by PT Timor Putra Nasional, a joint venture between KIA and President Suharto's youngest son Hutomo Mandala Putra.

The car is controversial because Indonesia allows only PT Timor Putra Nasional to import vehicles free of the tariffs and luxury taxes that the nation imposes on other car makers. The Indonesian government permitted the joint venture to import about 40,000 Timor cars before it starts assembling the vehicles in Indonesia early next year. PT Timor must meet a local content target of 20 percent in its first year of operation to continue to qualify for the tax breaks and 60 percent by the end of its third year of operation.

Japan has threatened to take the issue to the World Trade Organization if Indonesia doesn't change the policy; the United States and the European Union have objected to the policy because it breaks WTO rules.

Paul Dever -- The Auto Channel