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.