AIKI sees 2001 car imports to drop by 33%

JAKARTA (JP): The Association of Indonesian Vehicle Importers (AIKI) has projected car imports in 2001 to decline by 33.3 percent to 10,000 vehicles from 15,000 last year, particularly due to the recent government decision to boost import tariffs effective Sept. 1.

AIKI chairman Budhiman Siro said on Friday that the tariff hike would boost car prices, which in turn would squeeze demand.

"The government's decision to impose high tariffs on imported cars will significantly reduce vehicle imports in 2001," Budhiman said during a discussion.

He said that car imports in the first seven months of this year had reached slightly over 4,000 vehicles.

The government announced earlier that import tariffs for luxury cars with an engine capacity of more than 3,000 cc would be raised to 75 percent compared to the current level of between 30 percent and 50 percent.

According to the ruling, cars with an engine capacity of between 2,500 cc and 3,000 cc would be subject to import tariffs of 30 percent from 20 percent.

The government has been searching for alternatives to secure financing for the current state budget.

The above category of cars is considered here as luxury cars. Lower engine capacity cars are mainly manufactured or assembled here.

Several industry experts, however, have previously played down the impact of high tariffs on the demand for luxury cars, reasoning that those who have a high income will still buy these vehicles despite the surge in price.

Anti-luxury car groups have welcomed the government's decision. The groups have often launched campaigns to stop luxury car imports on the grounds that more than half of the country's population were still suffering from the economic crisis which started in 1997.

But Sirod said AIKI's 120 members, one third of which are motorbike importers, would continue importing the vehicles to meet domestic market demand.

"Market demand is still there, albeit it is still very small," he said.

On Wednesday, Minister of Industry and Trade Rini M.S. Soewandi also appealed to rich Indonesians "to be sensitive to the sufferings of those less fortunate than them" in order to avoid social jealousy because of the gap in social disparity.

Sirod, however, argued that importers were simply trying to meet the domestic demand for luxury cars.

"Nobody and no law can stop the domestic market (demand)," he said.

"It is true that we have to be sensitive to the feelings of less fortunate Indonesians and that we better use locally produced cars, but we should not deprive others of their right to own other models," Sirod said.

The pressure on car imports is also expected to help save the country's hard won and limited amount of foreign exchange reserves.(03)