(1) - Ford proposed to support the Indonesian market with American, European and Japanese sourced products.

- Ford committed to the development of a joint venture, has assigned four full-time foreign service employees to Indonesia, and was actively pursuing the acquisition of assembly facilities in the market.

- GM has invested $110 million for 3 products: Opel Optima, Opel Vectra and Opel Blazer.

- The Opel Blazer is in production and GM had approval to bring in new models for Opel Optima and Opel Vectra

- The National Vehicle Programme forced GM and Ford to liquidate inventories under difficult terms:

- Sales were lost due to depressed market conditions

- Significant incremental merchandising costs were incurred to relieve inventories

- Prices/revenues were negatively impacted

- Timor had significant negative impact on GM and new foreign based suppliers particularly in the suppression of component and sales volumes.

- Future investment for Ford and GM is on "hold".

- September 1995 to September 1996 the overall market is down (16.8%) which negatively affected volumes and prices.

- GM transaction prices were reduced by $7,000/unit

- Ford transaction prices were down by $6,500/unit

- Perceived instability in the "Regulatory Framework" is negatively impacting ability to attract new investors (suppliers and dealers) and new product investment by manufacturers.

- GM cut back their current assembly plant from 2 shifts to 1 shift of production.

- GM anticipates a further (15%) reduction in Blazer retail sales if Kia/Timor Sportage is added to the National Vehicle Programme.

(2) - Ford cancelled the Escort programme as a direct result of the National Vehicle Programme after having committed assets of $1.0 million. This included production and assembly equipment, tooling, component parts, and engineering all of which were in Indonesia prior to the National Vehicle Programme.

- Plans to export to third countries, both vehicles and components, are, or will be negatively affected. Reduced volumes in Indonesia as a result of the National Vehicle Programme has caused higher component costs. At the same time, Korean suppliers will enjoy higher volumes and potentially lower costs due to the monopolistic relationship in Indonesia.

- Opel Vectra and Optima are regional products. Plans to utilize domestic suppliers in Indonesia to reduce the cost base for other regional assemblies of products have been cancelled due to postponement of the Vectra and Optima production in Indonesia.

(3) - The impact of the announcement of the National Vehicle Programme in Indonesia was a depression of sales in all potentially impacted retail market segments. The impact on these segments were:

- It is clear that when the National Vehicle Programme was announced, which included the sport utility "Sportage" as Timor 520i, the retail sales were depressed because consumers were waiting to evaluate the impact of the National Vehicle Programme.

- Manufacturers responded to the announcement by increasing incentives in the market to include, but not limited to, free extended warranties, free or low interest rate financing, and free service contracts that included both parts and labour, all of which were especially true in the C Segment where the impact was expected to be the most immediate.

- These merchandising efforts artificially increased the sales volumes in the C Segment, through June versus June a year ago, until inventories were considered by manufacturers to be reasonably aligned, June through September retail sales then plummeted (30.4%) versus the same period last year.

- In those segments where the National Vehicle Programme was expected to have little or no direct impact on the industry increased. Through June CYTD these segments grew +12.4% and through September CYTD they maintained this growth at +11.7%.

- Ford's Escort and Sport Utility programmes were developed to be the regional basis of Ford's ASEAN and AICO strategy. Indonesia was to be a pivotal manufacturing centre for AICO complementation.

(4) - All elements of this question were addressed above in 1 through 3 except for price suppression.

- The GM Business Plan/Budget called for price increases on Optima, Vectra and Blazer. These were in line with the historical price/inflation trends in Indonesia. These increases have not been possible to offset the CPI increases.

- Historically the CPI has increased 8-10% annually in Indonesia. This is running consistent for 1996 and the forecast for 1997. Historically, and based on economic principles, automotive pricing closely tracked the CPI as the CPI reflects the cost structure. This is an established, normal, cost/price economic structure in the automotive industry for OEM's and component suppliers

- Due to the National Vehicle Programme announcement, prices are artificially flat or decreasing while the CPI continues to increase.

- The Timor is Korean manufactured today and is operating in a different economic structure than other manufacturers in Indonesia. This is further compounded by the unique exclusion of duties and taxes on Timor.

A. Indonesia, in mid-1993 took steps to deregulate the automotive industry. US automotive interests viewed this as a very positive and progressive approach to opening the Indonesian market, and when subsequent actions undertaken in 1994 and 1995 reinforced this trend, it revitalized automotive manufacturers' interest in Indonesia.

In February 1996, the Indonesian Government announced a regressive automotive policy that provides preferential tariff and tax treatments for one company. In addition the regulations precluded US or other foreign automotive manufacturers from participating due to restrictive practices relating to foreign equity participation and product naming.

Overall, the US automotive manufacturers believe the National Vehicle Programme damages Indonesia's interests and the Indonesian automotive industry.

We had firm plans to assist the development of the industry in Indonesia, and to make Indonesia a key part of our ASEAN, Asia and global plans. This is now all on hold due to the change in policy direction contained in the National Vehicle Programme. The US automotive manufacturers require renewed confidence in the Indonesian Government if they are to increase, or even maintain, their investments and commitment to Indonesia.

B. 1. - All passenger cars are directly impacted by PT Timor and the Blazer is indirectly impacted because of the passenger car substitution effect and the associated announcement of the "Sportage".

- All of the passenger cars were impacted by volume depression, price sensitivity, and transaction price reductions in order to be as competitive as was realistically possible given the tariff and tax inequities.

2. - The Ford Escort and Laser, and Opel Optima and Vectra are petrol engines, 4 door sedans that compete in the C Segment of the industry and are immediately impacted by PT Timor

3. - Escort was projected to achieve 5.2%, 10.0%, 10.5% and 11.0% in the first four years after introduction in 1996 or 15,100 units over the first four years. The cancellation of Escort totally eliminated these sales.

- Laser was projected to sell 1,400 units over the same four year period.

- Total projected lost unit sales/revenues at retail for Ford is 16,500 units over the four year period.

4. - The local content plan for Escort was just under 20% at launch, progressing to over 20% within 2 years, and over 40% local content within 4 years. This was the committed local content plan that was part of the implementation plan for Escort.

- GM purchases 45% of Blazer's components locally from 67 suppliers and 55% is imported from 21 locations in 11 countries around the world.

5. - Both Ford's and GM's vehicles have worldwide component sourcing, and vehicle manufacturing/assembly was to be accomplished in Indonesia.

6. - Products that are the result of multi-national corporations and their affiliated suppliers worldwide are home country funded and should thus be considered as home country corporate products without regard to the country of sourcing.

C. 1. - Ford had an approved investment plan of $56.0 million with the feasibility of future investment in assembly to be determined based upon the needs of the market and manufacturing requirements.

- GM has invested $110.0 million in an assembly plant for Optima, Vectra and Blazer, GM's total investment plan was up to $750 million in Indonesia.

2. - Ford's total planned investment was committed to the establishment of Escort in the market with both local assembly and increasing local content, ultimately reaching 40% local content by the fourth year.

- Local content and assembly plans were being implemented for Laser and Telstar as well as future planned product introductions for Indonesia.

3. - American automotive investment plans have been placed on "hold" pending the determination of the revised regulatory environment, the National Vehicle Programme, the economic stability, and the political future of Indonesia.

4. - General Motors has invested $110 million in a plant in Bekasi, and launched the Opel Blazer, Optima and Vectra. They have established 34 full service dealerships and currently have 550 employees in Indonesia.

- GM had approval to introduce new models for both Optima and Vectra, which is now on "hold".

- Ford was in the process of launching the Ford Escort, finalizing plans to establish a joint venture in Indonesia and acquiring a manufacturing facility.

- Ford's plan was part of an Asian strategy which already has resulted in investments of:

- Ford was developing plans to launch two major vehicle programmes in Indonesia - one with a product designed and developed primarily for Indonesia.

- The Ford's total investment in these programmes could have been in line with Ford investments in other countries in the region.

- All future investment by GM and Ford are on "hold"."