AFTA won't bring cheap cars

The Jakarta Post, Jakarta

The Association of Indonesian Vehicle Importers (AIKI) said that the number of cars imported from ASEAN member countries would remain low this year, despite the implementation of the regional free trade area, which has slashed import tariffs to between zero percent and five percent.

AIKI chairman Budiman Siroj said on Wednesday this was because Malaysian-made cars could not enjoy low import tariffs when entering the Indonesian market because Malaysia had delayed the opening up of its automotive sector until 2005.

Budiman said that there were only three Southeast Asian countries -- Indonesia, Thailand and Malaysia -- which manufacture cars.

Under the ASEAN Free Trade Area scheme or AFTA, which took effect on Jan. 1, the import tariff on almost all products traded among the six original ASEAN members - Indonesia, Singapore, Malaysia, the Philippines, Brunei Darussalam, and Thailand -- should be reduced to between zero percent and five percent.

Indonesia and Thailand have agreed to include their automotive products in the AFTA scheme.

It means that car imports from Thailand could be sold at cheaper prices on the Indonesian market starting this year.

Some reports suggested earlier that the implementation of AFTA would trigger the influx of cheaper cars onto the local market, which in turn would cause car prices at home to go down.

Elsewhere, Budiman predicted that the domestic market demand for imported cars, particularly on already assembled models, would remain high this year, at around 10,000 units.

He said that this would be dominated by Japanese and European- made cars.

As of November last year, the total number of cars imported reached 8,500 units.

"Car imports will remain high this year because there will be several new models equipped with high technology," Budiman was quoted as saying by Antara.