Analysts criticize new automotive industry policy
Analysts criticize new automotive industry policy
JAKARTA (JP): Reaction to the new national automobile program has been mixed. Economists and securities analysts feel it is unfair while the Chairman of the Indonesian Chamber of Commerce and Industry Aburizal Bakrie welcomed the measure, believing it will result in lower car prices.
"I welcome and support any policy which will cut the prices of domestic products, including automobiles," Aburizal commented yesterday.
The program, unveiled on Wednesday, grants import duty and luxury sales tax exemptions to cars which use Indonesian brand names, are produced by Indonesian companies and are developed with domestic technology, engineering and designs.
Aburizal underlined, though, that all car companies which meet the requirements should be able to get the incentives granted under the national automobile program.
But economist Didik J. Rachbini said the government's ruling to exempt pioneer Indonesian automobile firms from import duty on components and the luxury tax on car sales was unfair and inconsiderate because it only benefited PT Timor.
Didik, who is the director of the Institute for the Development of Economics and Finance, said the policy could curb overall economic growth as other automobile firms would struggle to cut the prices of their products to compete with Timor's products.
He also felt the policy would affect the government's popularity and was unlikely to change the face of the country's automobile industry "As the industry has been in trouble for the past 20 years, I doubt this new regulation can make it better," he said.
The issue was not one of technology or business, but rather of politics and the economy, according to Didik.
Protectionist
He said this was not the first time the government had taken a stance by issuing protectionist measures for certain manufacturers, and the issue of the new ruling for the automobile industry was just a case that could be extended to other industries.
Didik said the government should make fair rules, especially when dealing with matters of public interest.
"The government has failed to show that it can act as a good referee. Sometimes it becomes a businessman and at other times businessmen become the government" he said.
Several securities analysts commented that the new car policy might affect the interests of new foreign investors in the country.
They said it would have an adverse impact on the automobile industry and other manufacturing industries as well.
But members of the House of Representatives had different views on the issue.
Legislator Hamzah Haz from the United Development Party faction welcomed the new ruling, but cautioned that it should not lead to a monopoly for Timor cars, nor cause other automobile firms to collapse.
He said the ruling should not only benefit the upper and middle income classes but should help to provide the lower-income class with an affordable means of transportation.
Similarly, legislator Sabam Sirait from the Indonesian Democratic Party faction, said the ruling should not be limited to sedans but extended to commercial vehicles which are used most by the general public.
In a related development, an executive director of PT Timor Putra Nasional Sudjaswin said yesterday that the Timor sedans are being assembled at the PT Indauda plant in Surabaya which is 30 percent owned by the Kia Motor company of South Korea and 70 percent by President Soeharto's son Hutomo Mandala Putra.
"We will launch our Timor sedans from the Surabaya plant in September," Sudjaswin added.
The assembly plant currently being built by PT Timor Putra in Cikampek, West Java, will eventually take over the production of the cars.
"We are confident about achieving 20 percent local content by the end of the first year of our production," he said but he declined to say when the production in Cikampek would start. (pwn/kod/31/pan)
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