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)