Gaikindo says progressive tax may not hurt auto demand<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The government's plan to impose vehicle progressive tax is
\nunlikely to affect domestic demand since the policy is aimed at
\ndiscouraging people from having more than one car rather than
\nbeing a fuel saving effort, an association says.<\/p>\n
The Association of Indonesian Automotive Manufacturer
\n(Gaikindo) chairman Bambang Trisulo said the plan would not
\naffect the association's car sales target for this year.<\/p>\n
"The planned regulation will only affect car owners with more
\nthan one car, and their number is less than 1 percent of the
\ncountry's 220 million population. I don't think it will affect
\nthe industry much," he said after meeting Vice President Jusuf
\nKalla on Tuesday.<\/p>\n
The progressive tax, expected to be imposed immediately, will
\nforce car owners to pay higher taxes of between 50 percent and
\n200 percent of from the normal rate for their second and
\nsubsequent cars.<\/p>\n
"Vice President Kalla said the government was still studying
\nthe plan. Possibly, the scheme will be announced to the public
\nnext week," said Bambang.<\/p>\n
The plan is being studied by the Ministry of Energy and
\nMineral Resources and the Ministry of Finance.<\/p>\n
Gaikindo has projected that car sales will reach about 550,000
\nunits this year, a revision of its original target of 520,000.
\nThe figure is much higher than last year's 483,000.<\/p>\n
Bambang said the domestic car market remained promising
\nbecause of the low penetration of cars into the market. The ratio
\nof cars to people in Indonesia is 1:30, compared to the United
\nStates ratio of one car to 2.<\/p>\n
He pointed to some items that could discourage demand,
\nincluding the possibility of increasing car prices as a result of
\na steady weakening rupiah against the U.S. dollar and constant
\nhigh global oil prices, which hit US$60 per barrel on Monday.<\/p>\n
"Currency exchange rates and high oil prices are two key items
\nthat may raise car prices. But local automotive manufacturers
\nwill think twice before increasing prices due to tight
\ncompetition."<\/p>\n
Bambang said to avoid increasing prices, manufacturers would
\nexplore possibilities of reduce production volumes that might
\nreduce the numbers of their workforce.<\/p>\n
At present, there are 200,000 people working in the automotive
\nmanufacturing sector. This number excludes those in supporting
\nindustries.<\/p>\n
During the meeting with Kalla, Gaikindo also discussed its
\npreparation for the Gaikindo Auto Expo from July 8 to July 17
\nthat would attract 150 participants including 25 manufacturers.
\nKalla is slated to officially open the expo.<\/p>\n
Himself a businessman, Kalla's business group has controlled
\nthe sole distributorship for the Toyota Kijang vehicle for the
\neastern Indonesian market since the 1970s.<\/p>\n
Bambang said the association expected total transactions
\nduring the expo to reach about Rp 1 trillion (US$104 million), up
\nfrom Rp 600 billion in 2003.<\/p>",
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