Analysts open fire on tax breaks for new carmaker
Analysts open fire on tax breaks for new carmaker
JAKARTA (JP): Several stock analysts criticized the import
duty and luxury tax exemption given by the government to a newly-
established automaker, PT Timor Putra Nasional, as unfair and
discriminative.
The research director of PT HG Asia, Jonathan Harris, told The
Jakarta Post yesterday that foreigners view any kind of
protection negatively.
"Most of the foreign investors were upset yesterday. That is
why there was strong selling pressure on the Jakarta Stock
Exchange (JSX) yesterday soon after the announcement of the new
car policy," Jonathan said.
He said that the new regulation has not only affected
publicly-listed carmaker PT Astra International, but the entire
market.
The regulation, according to Jonathan, will have a long-term
impact on Indonesia's car industry, as well as other industries
as foreigners will now think "investing in Indonesia is less
predictable".
On the future prospect of the automobile industry, he said
"This is the first time Astra gets a real competitor,
particularly in passenger cars."
Astra, according to Jonathan, may be able to maintain its
sales volume this year but expects its sales to be affected next
year.
An analyst with a foreign brokerage told the Post that the
worst aspect of the regulation is that the huge price difference
will put competitors, who do not enjoy any tax exemptions, in a
very difficult position.
"Although the success of the newly established company will
still depend on the extent of its distribution network and
service centers, cheaper prices are a strong cutting edge to beat
its competitors," she said.
The analyst, who preferred anonymity, said that Timor's
partner, KIA Motor company of South Korea, is actually not the
biggest carmaker in its home country.
She said that KIA's best products in Korea are trucks. KIA is
also known for its jeeps.
"But I don't think that KIA's sedans, like those to be
produced by PT Timor, have competitive quality as compared to
Japanese cars," she said.
However, she noted that it's still too early to estimate the
future performance of other carmakers like Astra.
"What we are now waiting for is a reaction from the Indonesian
auto assemblers association. We also wonder if it could have a
significant effect," she added.
Jonathan foresaw that KIA's commercial cars will become the
Astra's most significant competitors.
"In the longer term, I would say that Astra will be forced to
revise the ratio of its passenger and commercial car production,"
he noted.
The analyst said that Astra, as the most dominant player in
the country, had a 56 percent share of the commercial car market
last year with total sales of 85,000 vehicles. Toyota alone
accounted for 25 percent.
Mitshubishi and Suzuki respectively have 21 percent and 20
percent market shares.
For passenger cars, Astra has approximately 74 percent of the
total market with the brands of Toyota, BMW and Peugeot, followed
by Honda with 13 percent, Mitshubishi with 8 percent and Suzuki
with 5 percent.
A dealer from a local brokerage told the Post that Astra's
share prices declined further yesterday as the market reacted to
the new car industry regulations.
Astra's local price, according to the dealer, dropped by four
points on Wednesday to Rp 3,075 (US$1.30) and another four points
yesterday to close at Rp 2,875.
Astra's foreign price fell Rp 300 to Rp 4,675 on Wednesday and
continued to drop by eleven points or 16 percent to Rp 3,850
yesterday.
He added that in yesterday's trading, Astra's turnover was
estimated at 13 million shares.
Jonathan noted that although the general market was weak
yesterday as the JSX index plunged 10 points to 585.20, that was
not the main reason for Astra's share price drop.
"On the contrary, it was the entire market which was affected
by the regulation," he contended.
He also forecasted that Astra's share prices will continue to
decline.(08)