KUALA LUMPUR: Indonesians were stunned by their president’s decision to appoint a little-known organisation headed by a political affiliate as the partner for a joint venture with Malaysia’s Proton Holdings Bhd to build a national car, The Jakarta Globe reported on Monday.

President Joko Widodo (also known as Jokowi), who was on a two-day state visit to Malaysia, had witnessed the signing of a memorandum of understanding (MoU) with Indonesia’s PT Adiperkasa Citra Lestari (PT ACL) to help the company develop and manufacture an Indonesian national car.

Signing on behalf of Proton was chief executive officer Datuk Abdul Harith Abdullah, while PT ACL chief executive officer Abdullah Mahmud Hendropriyono signed for the company.

The Jakarta Globe reported that Abdullah Mahmud was a close associate of Megawati Soekarnoputri, the chairman of the Indonesian Democratic Party of Struggle (PDI-P), and Jokowi’s political patron.

“That the president picked his company — which is not registered with Indonesia’s Industry Ministry and whose history and line of business remain unknown — to represent Indonesia in the joint venture has prompted speculation of yet another concession being made by the president to his party chief,” the daily reported.

A party official Ulil Abshar Abdala was reported to have tweeted: “Suharto was in power more than 25 years before he granted the concession for a national car to his cronies. Just FYI, bro.”

The previous project was run by Suharto’s son, Tommy, and Abdullah Mahmud, the report said, was apparently the president commissioner of Kia Mobil Indonesia from 1999 to 2001.

The company rebadged Kia cars from South Korea, presenting them as Indonesian-assembled Timor vehicles but it was forced to close in 1998 following the Asian financial crisis and Suharto’s fall from power.

The report said Indonesians were now wondering why PT ACL was chosen instead of makers of the Esemka to partner with Proton for the joint venture.

“If I were Joko, I would have brought Esemka into the cooperation with Proton Malaysia to produce a national car,” Fahri Hamzah, a deputy speaker of the House of Representatives, was quoted as posting on Twitter.

“He could have used this moment not just to launch the national car project but also to repay his friends at Esemka whom he used.”

The daily also noted that it was unclear why Proton, which has only a 1% market share in the Indonesian car market, was chosen to help develop its national car.

“There are already indications that the new venture will mirror the Timor fiasco, with Proton simply rebadging some of its existing models for the Indonesian market,” it said.

Ray Rangkuti, director of the Indonesian Civil Society Circle (Lima), was reported as questioning Jokowi’s move, saying it seemed as if Abdullah Mahmud was receiving many favours from the president.

“What is it that makes Hendropriyono so special to Jokowi? His son-in-law becomes the chief of presidential guards while his son occupies the highest position in Telkomsel. Now, he got this contract,” he was quoted as saying.

“Many people helped Joko to the presidency. But it seems that only Hendropriyono is special.”

Abdullah Mahmud was reported as saying that it was more cost-efficient for PT ACL, which he started in 2000, to go into partnership with Proton rather than develop its own products, citing infrastructure, after-sales service and networking needs.

He also fired at critics who claimed his family members were being given choice roles in the country after Jokowi was elected president, and said that both his son and son-in-law had “built their career and made professional achievements on their own”.

His son Diaz Hendropriyono was appointed a commissioner at Indonesia’s largest mobile operator — state-owned Telkomsel, while Andika Perkasa, his son-in-law, was appointed the commander of the presidential guard Paspampres.

Political communication expert Effendi Gazali was reported as saying that the controversy over the deal was of “wrong timing”, as many Indonesians were still angry at Malaysia for insulting migrant workers from Indonesia.

Bernama reported that under the MoU, which was signed last Friday, a six-month feasibility study would be conducted to explore specific areas of cooperation between both companies, including the potential development and manufacture of the car in Indonesia.

Proton chairman Tun Dr Mahathir Mohamad said the MoU was the result of discussions between Jokowi and Prime Minister Datuk Seri Najib Razak. — The Malaysian Insider

This article first appeared in The Edge Financial Daily, on February 11, 2015.