Car industry told to strive for efficiency

Car industry told to strive for efficiency

JAKARTA (JP): Minister of Industry Tunky Ariwibowo has told
automobile producers to improve efficiency, or face being edged
out under impending Southeast Asia free trade arrangements.

"Efficiency is a keyword for winning, both regional and global
competition. Thus, I call on the local automotive industry to
improve efficiency, as we still have enough time to do so," Tunky
told a seminar organized by the German alumni association in
cooperation with the Indonesian automotive industry association.

He said that, even though they are not engaged in exporting,
local automobile producers will face tougher competition -- even
on the domestic market -- from foreign car manufacturers,
especially after the advent of the Association of Southeast Asian
Nations Free Trade Area (AFTA) in the year 2003.

By that year, under last May's deregulatory package, import
tariffs on sedans and station wagons of the types assembled
domestically will be cut to 40 percent from the current level of
125 percent.

The tariffs on pickups and minibuses will be reduced to 30
percent each by 2003, from the current levels of 50 percent and
75 percent respectively.

Efficiency

"The year 2003 is something given, and we cannot avoid it. So,
in anticipating the implementation of AFTA, once again we have to
improve our efficiency. That's the only way," Tunky said.

In addition to foreign players, Tunky said that, as the
government had removed the automotive sector from its negative
investment list, the existing automobile assemblers will face
newcomers to the industry as their competitors.

He said the government has given enough room to domestic
automotive producers to improve their specialties, in either
trading, manufacturing or assembling automobiles.

"So, it's not true that we haven't developed the automobile
manufacturing industry. We let those involved in the industry
decide themselves whether they want to do trading, assembling or
manufacturing. We leave it completely to their business
judgment," Tunky said.

Critics have said that Indonesia's automotive industry cannot
yet move into full manufacturing because it has been heavily
protected. They argue that those who have enjoyed the
government's protection have used their "rent" profits in other
sectors, rather than developing the automotive industry.

Others have said that Indonesia lags behind in the automotive
industry because too many automobile brands have been developed
in the country.

Tunky, however, ruled out any limitation on the number of
automobile brands, saying that such a limitation would be
inconsistent with the deregulatory policies currently being
pursued by the government.

"The success of any industry, including the automotive
business, will depend very much on the customers. Therefore, if
the costumers do not like a certain product, maybe because of its
prices, the product will be automatically edged out," Tunky said.

The minister also ruled out the possibility of limiting the
production of automobiles in Indonesia. "Many of our people do
not have cars. Once they are capable of buying them, let them buy
them and enjoy driving their own cars. So, I won't limit either
the number of car brands or of the cars themselves." (rid)