Gaikindo says progressive tax may not hurt auto demand
Gaikindo says progressive tax may not hurt auto demand
Rendi A. Witular, The Jakarta Post, Jakarta
The government's plan to impose vehicle progressive tax is
unlikely to affect domestic demand since the policy is aimed at
discouraging people from having more than one car rather than
being a fuel saving effort, an association says.
The Association of Indonesian Automotive Manufacturer
(Gaikindo) chairman Bambang Trisulo said the plan would not
affect the association's car sales target for this year.
"The planned regulation will only affect car owners with more
than one car, and their number is less than 1 percent of the
country's 220 million population. I don't think it will affect
the industry much," he said after meeting Vice President Jusuf
Kalla on Tuesday.
The progressive tax, expected to be imposed immediately, will
force car owners to pay higher taxes of between 50 percent and
200 percent of from the normal rate for their second and
subsequent cars.
"Vice President Kalla said the government was still studying
the plan. Possibly, the scheme will be announced to the public
next week," said Bambang.
The plan is being studied by the Ministry of Energy and
Mineral Resources and the Ministry of Finance.
Gaikindo has projected that car sales will reach about 550,000
units this year, a revision of its original target of 520,000.
The figure is much higher than last year's 483,000.
Bambang said the domestic car market remained promising
because of the low penetration of cars into the market. The ratio
of cars to people in Indonesia is 1:30, compared to the United
States ratio of one car to 2.
He pointed to some items that could discourage demand,
including the possibility of increasing car prices as a result of
a steady weakening rupiah against the U.S. dollar and constant
high global oil prices, which hit US$60 per barrel on Monday.
"Currency exchange rates and high oil prices are two key items
that may raise car prices. But local automotive manufacturers
will think twice before increasing prices due to tight
competition."
Bambang said to avoid increasing prices, manufacturers would
explore possibilities of reduce production volumes that might
reduce the numbers of their workforce.
At present, there are 200,000 people working in the automotive
manufacturing sector. This number excludes those in supporting
industries.
During the meeting with Kalla, Gaikindo also discussed its
preparation for the Gaikindo Auto Expo from July 8 to July 17
that would attract 150 participants including 25 manufacturers.
Kalla is slated to officially open the expo.
Himself a businessman, Kalla's business group has controlled
the sole distributorship for the Toyota Kijang vehicle for the
eastern Indonesian market since the 1970s.
Bambang said the association expected total transactions
during the expo to reach about Rp 1 trillion (US$104 million), up
from Rp 600 billion in 2003.