THE INTERNATIONAL Monetary Fund, leading a rescue of Indonesia's foundering economy, has accomplished what complaints from officials in Washington, Tokyo and Brussels could not. It has pulled the plug on Indonesia's national-car program.
The program granted flagrantly favorable and discriminatory tax breaks to a company headed by Indonesian President Suharto's son. It called for the production of 150,000 Kia Sephia-based cars a year. Because of exemptions, the car - the Timor - enjoyed a 50 percent price advantage over the competition.
Korea's Kia Motors Corp. shipped 40,000 Timor-badged cars to Indonesia last year.
'This certainly is a setback,' said Kia spokesman Jeun Sang-Jin in Seoul, 'but we still see opportunities ahead in the market.'
The Timor was launched in February 1996, but sales never took off. A recent visitor to Jakarta, commenting on unsold Timors lined up along roads around the city's airport, said, 'There was a lifetime supply of those cars.'
Other carmakers said the IMF decision opens the door to more investment. Ken Brown, a spokesman for Ford, said that dropping the advantages bestowed on the Timor 'has opened the door for the possibility of investment long-term.'
But he added that the market deserves further study.
Donald Sullivan, president of General Motors' Asian and Pacific Operations, said that 'President Suharto's announcement changes the competitive environment dramatically and consequently changes our attitude toward investment in Indonesia.'
Even before the national-car cancellation, GM had bought out its Indonesian partner's 40 percent stake in a plant that assembles Blazers badged as Opels.
'We now stand ready to make further investments, including the introduction of new products,' said Sullivan, 'as soon as market conditions become more favorable.'