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Orbital and Texmaco Sign Manufacturing Agreement

18 December 1998

Orbital and Texmaco Sign Manufacturing Agreement For OCP 2-Stroke Engine Family

    PERTH, Western Australia, Dec. 18 -- PT Texmaco Perkasa
Engineering Tbk. (TPE), a leading industrial company incorporated in the
Republic of Indonesia, today announced its decision to license from the
Orbital Engine Corporation the rights to manufacture a range of
Orbital Combustion Process (OCP) two-stroke engines.  These engines are
targeted for use in various automotive applications for both domestic and
global markets.
    It is anticipated that the first OCP 3-cylinder 2-stroke engines made by
Texmaco will be in production within two years at initial volumes of
approximately 30,000 units per annum.  These engines will be followed closely
by 2-cylinder and 1-cylinder versions.
    "In addition to servicing Texmaco's internal product demands, Orbital
views the new engine manufacturing venture as strategically placed to supply,
low-cost, high-quality OCP engines to independent vehicle manufacturers
worldwide," said Kim Schlunke, Orbital's Chief Executive Officer.
    OCP 2-stroke engines can be produced at up to 30% less cost than
equivalent performance conventional 4-stroke engines due to the potential of
40% parts reduction, and 30% lighter weight.  Such benefits allow substantial
reductions in fuel consumption, further reducing the production of carbon
monoxide, a major contributor to greenhouse gases.  The application of OCP
Direct Injection to a 2-stroke automotive engine enables compliance with
European Stage III and California ULEV legislation for exhaust emissions with
a simple two-way oxidation-only catalyst.
    "By adopting OCP technology, Texmaco is making a great contribution to
improving the environment in the region and eventually the world," said
Mr. Schlunke.
    Orbital launched a highly successful release of 100, OCP 3-cylinder
2-stroke vehicles into the Australian market in 1996.  This fleet has
accumulated in excess of 4.25 million kilometers over the last two and a half
years and has proved invaluable in demonstrating the merits of an automotive
two-stroke engine for the consumer and the manufacturer alike in terms of
performance, reliability and cost.
    TPE is an established OEM automotive component supplier in local and
export markets, and has technology agreements with Cummins (USA) for diesel
engines, ZF (Germany) for gears and transmissions, Steyr (Austria) for large
capacity engines and axles, and Eaton (USA) for axles.  Product plans include
medium- and heavy-duty trucks and light commercial vehicles, used in
agricultural, engineering, construction and mining industries.  TPE announced
earlier this week that the first 300 Perkasa trucks would be launched in
February 1999 with an 85% local content and at a price 30% less than similar
imported models.
    "This agreement highlights the willingness of emerging automotive
manufacturers to secure a strategic competitive advantage in the crowded
automotive industry," said Kim Schlunke.  "It's a further endorsement of the
potential of Orbital's advanced OCP two-stroke engine technology."
    TPE is a member of the Texmaco Group of Companies, with over 35 years of
manufacturing experience.  Texmaco is a major international group with sales
throughout the world in textiles, basic metals, industrial equipment,
engineering, automotive component manufacturing and vehicle assembly.  The
group employs over 30,000 people worldwide and had a turnover of around US$1
billion last financial year including US$400 million in exports.  TPE has
operating plants in Karawang and Subang, both in West Java, and Kaliwungu in
Central Java.  Individual facilities comprise over 100,000 square meters of
manufacturing space.
    Orbital is a leading international developer of engine technologies using
direct in-cylinder fuel injection and lean-burn systems for enhanced fuel
economy and lower emissions.  The company serves the worldwide automotive,
marine, recreational and motorcycle markets.  Headquartered in Perth, Western
Australia, Orbital stock is traded on the Australian Stock Exchange (OEC), the
New York Stock Exchange (OE) as well as the Berlin (ORE) and Frankfurt (OREA)
Exchanges.