Kia plans to continue with
Timor car project: Kalla

JAKARTA (JP): South Korean car manufacturer Kia Motors Corp. will revive its involvement in the currently suspended Indonesian national car project and is ready to inject some fresh funds into it, Minister of Trade and Industry Jusuf Kalla said on Tuesday.

""Representatives from Kia will arrive in Jakarta on April 1st to start negotiations with IBRA to form a new joint venture company to continue withthe car project,"" he said in a hearing with the House of Representatives Commission III in charge of agriculture and food affairs.

The minister said the Indonesian Bank Restructuring Agency (IBRA) would first restructure the debts of PT Timor Putra Nasional (TPN), the insolventlocal company that owned the car project, before finalizing the new deal with the South Korean company.

He said the restructuring of TPN, which could be accomplished through debt rescheduling or debt to equity swap, was expected to be completed before April.

Kalla said Kia had pledged its commitment to the Indonesian government during President Abdurrachman Wahid's official visit to South Korea earlierthis month.

He said the government estimated the resumption of the Timor national carproject would require about US$100 million.

""With the resumption of the Timor car project, we expect to make Indonesia the new car manufacturing center for the Korean car industry in Asia,"" he added.

Kia, now owned by South Korean car giant Hyundai Motor Co., withdrew lastyear from the controversial 1996 Soeharto-era production joint-venture withTPN, for which it provided knock-down car units and technology.

TPN, controlled by Hutomo Mandala Putra, the youngest son of Soeharto, was appointed in 1996 by the government to develop the national car program.

The company was exempted from import duty and luxury tax for three years on the condition that the local content reach at least 20 percent in the first year of the program, 40 percent by the end of the second year and 60 percent by the end of the third year.

But, TPN is now saddled with around Rp 3 trillion in debts following a sharp decline in sales and disagreement with the taxation office over some alleged unpaid import duty. (cst)

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