A Nation's Dream Car

Several months after becoming the president director of Indonesian Service Company (ISC), a state-owned car assembly company, Hasjim Ning invited President Sukarno to inspect the assembly factory in Tanjung Priok, Jakarta, where the company headquartered before officially moving to Jalan Lodan. The invitation was accepted, and Sukarno finally came to pay a visit.

Hasjim Ning showed every nook and cranny of the factory to the president who excitedly observed the installation of each component of the car that was being assembled. His keen interest was shown through the questions he often posed. After the factory tour, they were having a lunch break while discussing matters concerning the ISC. Hasjim Ning disclosed the conversation in his autobiography Pasang Surut Pengusaha Pejuang.

"Tell me your difficulties in leading this company. I'll help you to resolve it," said Sukarno.

Hasjim Ning replied, citing the local human resources as the biggest adversity faced by the industry.

"What are your plans to overcome it?"

"Sending staff to study abroad and learn new skills."

"Very well. However, what they need to achieve is not only to be skilled in assembling cars from America, but also to build our own car, a national car. This company is a national company, and so it has to bring pride to our nation."

Hasjim Ning understood that he had to fulfill that ambition, yet there wasn’t any slight doubt that he'd be able to achieve it. Although, over the course of time, a growing reluctance started to emerge: "the hope that was put on me is too big, it almost seems like an illusion of those who had just gained their independence."

The Acquisition of the Automotive Industry

Established in 1950, ISC was a joint venture of NV Putera and Zorro Corporation. NV Putera was a subsidiary of Bank Negara Indonesia (BNI) that was focusing on the export-import sector. On the other hand, Zorro was founded by Matthew Fox, a Hollywood movie tycoon who helped Indonesia during the revolution era. Fox also controlled the import monopoly and the assembly of the American vehicles such as Dodge, Willys, Jeep, Ford, and Zephyr.

ISC was seen as the symbol of Indonesia's nationalism in the economic world. The company, in Hasjim Ning's term, "desires to be the leader in its own homeland".

However, ISC was not the only company to have such a goal. There was Gaja Motors (previously General Motors, now owned by Astra), a state-owned company that was appointed as the sole agent and assembler of General Motors' products. Similar to ISC, Gaja Motors was also expected to be independent, or in Indonesian term, “berdikari”, an acronym for berdiri di atas kaki sendiri (standing on one’s own feet), by manufacturing the nation's own car.

Apart from those two, there were also several other assembly companies and private car import agencies, which survived by relying on political connections. The existence of those companies inevitably doubled the number of car brands available in the market, thus tightening the competition and inherently putting the national automotive industry in an unhealthy competitive environment.

After a fruitless rationalization attempt, the government took over the automotive sector from the private corporations in 1959. A special committee was then established in the Bureau of Industrialization at the Department of Basic Industry and Mining (Deperdatam). One of the ambitious projects planned out was to manufacture Indonesian vehicles in line with the state principles.

In Konglomerasi: Negara dan Modal dalam Industri Otomotif Indonesia, Ian Chalmers, a professor at University of Western Australia, mentioned that the ambitious project was more in the favor of the nation's politics rather than the economic calculations. The development of the automotive industry was expected to boost integration, sovereignty, and national independence. The project was also seen to be beneficial in protecting the nation's interest and preventing the national entrepreneurs from prioritizing their foreign partners.

Nevertheless, the plan came across challenges as Deperdatam's attempt to cooperate with Volkswagen and several American companies was unsuccessful. At the same time, the national entrepreneurs refused to be involved, leading to the postponement of the national car project.

The state control was getting stronger after the political tension heightened due to the West Irian dispute and the confrontation against Malaysia. The shipping services were in complete chaos, halting the whole car import activity. In addition, it was increasingly common for car purchases to be regulated through intergovernmental negotiations. Owing to the effort of the Minister of Department of Basic Industry and Mining Chaerul Saleh, the country was flooded with cars from Eastern Europe and Japan.

The domination of foreign brands both convinced and forced the national automotive companies to be involved in the national car project. Bisuk Siahaan, who served for quite some time in the Ministry of Industry, included the narrative in Industrialisasi di Indonesia: Sejak Rehabilitasi sampai Awal Reformasi.

<div class="quotes-center font-g">"Very well. However, what they need to achieve is not only to be skilled in assembling cars from America, but also to build our own car, a national car. This company is a national company, and so it has to bring pride to our nation."<br>~Sukarno</div>

In August 1962, Deperdatam formed an advisory body called Badan Pembina Industri Mobil (Car Industry Development Agency or BPIM),  with members composed of the representatives of several government agencies and private car entrepreneurs who would formulate policies on the motor vehicle industry.

In December 1962, the work result of BPIM was delivered to Deperdatam, to which BPIM advised on the establishment of a national car company under the name PT Industri Mobil Indonesia (Imindo) as a joint venture between the government (60 percent) and private sectors (40 percent). 

The government was represented by ISC and Gaja Motor, each owned 30 percent of share, while the private party was represented by 16 assembly companies recognized by the government. They were PT Ali Indonesian Motor Co. (Allimco), NV Indonesian Republic Motor Co. (IRMC), NV Indonesian Industrial Commercial Corp. (IICC), PT Masayu, PT Daswa Motor, PT Piola, PT Fuchs & Rens (Permorin), NV Java Motor, PT National Motor Co., PT Daha Motor, NV Tjahaya Sakti Motor, NV Horas, PT Imer Motors, PT Udatin, PT Pamos, dan PT Busimo–eleven of which were located in Jakarta.

The plan, as reported by Far Eastern Economic Review (FEER) on 9 May 1963, was for Imindo to build a main factory to produce vehicles. The car body and chassis were to be manufactured by ISC and Gaja Motor, while the other components would be produced by several spare parts factories across the country. 

The factory was expected to be built in Cipinang, Jakarta with the main priority to produce buses and trucks, which at that time were in high demand to transport passengers and goods, with the production target of 15,000 vehicles.

The joint venture was officially registered in 1964, but since the name "Imindo" was already used by another company, Imindo changed its name to PT Imindo Uneswa, short for PT Industri Mobil Indonesia Usaha Negara dan Swasta.

Assistance from Yugoslavia

None would deny that it would cost quite a fortune to realize the ambitious national car project. Imindo Uneswa, on the other hand, only managed to collect a joint capital of 18 billion rupiah. To accommodate the shortfall, the government tried to woo Yugoslavian companies. 

In August 1964, a long-term cooperation agreement was signed by the government with Crvena Zastava (“Red Flag”) and Tovarna Avtomobilov Maribor (TAM). The agreement comprised collaborations in design, production management, and many others. Imindo and Yugoimport also agreed on the CKD (Complete Knock-Down) shipment of 1,200 vehicles to be assembled in Indonesia with the help of experts from Yugoslavia during 1964 to 1965. 

According to Bisuk, the basic agreement that bounded the construction of the car factory was worth 28 million dollars, from which 20 million dollars were allocated to purchase diesel trucks from TAM and the vehicle of Crvena Zastava including the spare parts and the required equipments, while the rest was assigned to purchase machine and equipment needed by the main factory. Through the cooperation, the government expected Imindo Uneswa to be a medium for technology transfer.

Proving their commitment to the project, Zastava decided to open an agency in Jakarta which, in addition to selling cars, would carry out the cooperation agreement on producing cars in Indonesia.

The project was launched after Hasjim Ning, the famed Indonesian "Car King" and "Henry Ford", was convinced to take part in it.

On 18 March 1965, President Sukarno signed the Presidential Decree No. 54/1965 which specified PT Imindo Uneswa as a vital body and a mandatory project of the Temporary People's Consultative Assembly (MPRS), indicating that the project was under the direct supervision of Sukarno. Hasjim Ning was appointed as the president director, and the cooperation with Yugoslavia continued.

<div class="quotes-center font-g">“The government was determined to carry out the spirit of "berdikari" by manufacturing the nation's own car. President Sukarno had also instructed to establish a national car industry in three years”.<br>–Sketsmasa</div>

In January 1966, Imindo Uneswa and Yugoimport signed another contract regarding the shipment of Yugoslavia's vehicles to Indonesia. At the same time, Deperdatam executed a contract with Crvena Zastava and TAM extending the shipment of factory equipment and spare parts of Yugoslavia's vehicles to Indonesia for another year.

"Both contracts were concluded in the framework of the long-term cooperation between Yugoslavia and Indonesia to build a manufacturing factory in Indonesia," wrote Antara, 31 January 1966.

Then, in February 1966, as the follow-up of the main contract signed two years prior, there was a discussion between Indonesia and Yugoslavia in Beograd addressing the construction of Indonesia’s car factory. The Indonesian delegation was headed by Colonel Sukardi, assistant to the Minister of Department of Basic Industry and Mining. 

According to Bisuk, the discussion also determined the scope of the project. As a result, PT Imindo Uneswa was planned to be expanded to accommodate a factory for machine manufacture and iron forging, with a goal to establish an integrated industry. Both parties had also agreed on increasing the production capacity from 6,000 to 15,000 vehicles each year.

The project was set to start in three years, and leading to that, a technical team was sent to Yugoslavia. All progress regarding the project was reported directly to President Sukarno. 

As reported by Sketsmasa, the government was determined to carry out the spirit of "berdikari" by manufacturing the nation's own car. President Sukarno had also instructed to establish a national car industry in three years, despite the fact that the name hadn't been determined, according to the discussion between Sukarno, Chaerul Saleh, Jusuf Muda Dalam (Central Bank Minister), and the Yugoslav side. Regarding the cooperation with Yugoslavia, "... any credit charged to the car industry is expected to be covered by the car sales proceeds."

Unfortunately, the plans went adrift. The 1965 incident that put the political and economic situation in peril, forced Sukarno to descend from his seat of power and was ultimately succeeded by Soeharto.

The Disbandment

After Soeharto reigned supreme, every project from the Old Order era was reviewed, including the national car project.

On 6 April 1967, Minister of Light Industry Brigadier General TNI M. Jusuf had a discussion on the construction of a car factory in Indonesia with the Yugoslav ambassador and the directors of Crvena Zastava and TAM. On the next day, Deputy Prime Minister for Economy, Finance and Development Sultan Hamengkubuwono IX invited them to discuss the same matter.

During the deliberation, there was an indication that the cooperation with Crvena Zastava and TAM would be extended, that came with a request from the Indonesian government for the project payment to be postponed for two years. In return, Indonesia offered economic cooperation in the form of the exploitation of natural resources.

Another negotiation took place in 1968 where, wrote Bisuk, Yugoslavia proposed for the national car project and the import of cars from Yugoslavia to carry on. Regarding Indonesia's debt, they suggested using the foreign exchange earnings from Indonesia's export to Yugoslavia. 

<div class="quotes-center font-g">"The government prefers to purchase Japanese cars which were sold for a cheaper price, which payment could be done in credit that would be guaranteed by both countries."<br>–Hasjim Ning</div>

That idea was turned down by the Indonesian government, and it was even decided that the project would once again be reviewed due to the excessively high investment cost and the government’s inability to fund it.

In the end, the government decided to end the national car project. Despite that decision, the government signed a long-term economic agreement with Yugoslavia, without mentioning any association with the recently-canceled national car project. The agreement was stated in the Presidential Decree No. 262/1968.

One of the key figures was the Minister of Industry and Trade Sumitro Djojohadikusumo who encouraged foreign investors to assemble various products in the country. Behind that notion of localizing the car production, Ian Chalmers wrote, Sumitro actually stood in opposition to the industrialization concept. Not long before that, Sumitro was against the approach of the Minister of Industry Abdul Azis Saleh, and even said to one of the managers of PT Imindo Uneswa that "the entire plan was completely mad. It will bring no profit at all!"

Hasjim Ning was one of those who were profoundly impacted by the years of uncertainty following the transfer of power from the Old Order to the New Order. The government, who was the main consumer of the car industry, didn't order from ISC anymore. "The government prefers to purchase Japanese cars which were sold for a cheaper price, which payment could be done in credit that would be guaranteed by both countries."

The age of Berdikari was cut short while the ever-growing Japanese cars roamed all over the street.