Automo parts export to decline in 2004

Automo parts export to decline in 2004

Leony Aurora, The Jakarta Post, Jakarta

Indonesian automotive component exports are likely to decline
this year as Indonesia's competitiveness in the sector will keep
weakening due to the lack of tax incentives and the strengthening
of the rupiah against the dollar, says an association.

Chairperson of the Association of Automotive Component Firms
Hadi Surjadipraja said on Saturday increasing production costs
and Indonesia's higher inflation compared to other countries were
contributing factors in the trend.

"We want to export, but we cannot compete," said Hadi, adding
that the weakened competiveness had been a phenomena for some
time.

He noted that the government had provided a tax incentive by
allowing automotive component makers to refund import duties for
raw materials if they use the imported materials to produce goods
for exports.

However, in reality, the mechanism is not as simple. If the
exports are done through a third party, the import duties cannot
be reimbursed.

"Most components producers sell their goods to car
manufacturers, who in turn will export the cars," he added.

Indonesia's automotive component exports have seen a decline
since 2002, when its export value fell to US$629 million from
$681 million in 2001.

"Although I don't have the specific data yet, I think the
exports in 2003 have decreased too," he said.

Alem Pusbowo, operations chief of Astra Otoparts, one of the
main players in the industry, said that he expected Astra's
export value would remain stable this year.

"Our market is already set in the Middle East," he said,
adding that this year, his company was considering the
possibility of exporting to South American countries.

The firm's exports, which account for between 20 percent to 25
percent of its total revenue, consist mainly of car batteries.

Late last year, Director General of the Metal, Machinery and
Electronics Industry Subagyo of the Ministry of Industry and
Trade had urged local automotive component producers to be more
export-oriented.

He said that during a visit to the United States last year, a
ministerial delegate found that the large U.S. component market
needed a lot of supplies.

To develop and boost performance of the Indonesian automotive
component industry, Subagyo said the government invited experts
from Japan every year to give training to workers in the
industry.