Government says no brake on auto part import duty

JAKARTA (JP): The government has rejected a proposal by the Organization of Land Transportation Owners (Organda) to remove the import duty on spare parts.

Minister of Industry and Trade Jusuf Kalla said on Monday the abolition of the import duty would not be effective in reducing prices of parts.

"The current high prices are not due to the import duty but more to the depreciation of the rupiah to the U.S. dollar," he told association members at his office.

The import duty, which at present ranges between 5 percent and 10 percent, is considered low compared to other products, he added.

He said that despite its low level, the import duty was still needed to support local auto part producers.

The organization threatened last week to go on a two-day strike on Monday and Tuesday if the government did not respond to its proposal to increase bus fares. It called off the plan after the government promised to raise the fares.

It also demanded the government provide subsidies and the exemption of import duty on auto parts if it could not afford a significant increase in the fares.

"It is not only Organda who is facing this problem, other (business sectors) too," Kalla told the association members.

Kalla also said if the import duty was lifted, the facility would be enjoyed not only by public bus companies but also individual auto owners.

"If it happens, it will destroy our local auto part industry," he said.

He added the government's recent move to lift the import duty on imported tires in a bid to ease the financial burden on public transportation companies was a major blow to local tire producers due to the resulting influx of cheap imports.(07)