Government to provide subsidy for imported buses and taxis

JAKARTA (JP): The government said on Friday it would subsidize imported new buses and taxis by public transportation companies instead of handing out cash to compensate for the recent fuel price hike.

Minister of Industry and Trade Luhut B. Pandjaitan said that subsidizing imported new vehicles would bring greater benefit to commuters.

The subsidy, he said, is to partly cover the price of the vehicles and provide cheaper loans to finance the imports. Exemption of import duty and other taxes will also be part of the subsidy.

"These are efforts to lower investment costs, so that we can have new buses for the community to enjoy," Luhut told reporters after a meeting between an interministerial team and the Organization of Land Transportation Owners (Organda).

The plan, he said, covers the importation of new vehicles for public transportation operators across the country.

Commuters in Jakarta, he went on, can expect 4,200 new buses and 13,200 new taxis to start hitting the streets within six months.

The plan is based on a study by the University of Indonesia (UI), he said, adding that the plan will soon be proposed to Vice President Megawati Soekarnoputri.

Right now, the government is still working on the details of the plan, he said.

"According to Mr. Rizal's calculation, this kind of subsidy will cost us more than the initial plan," he said, referring to finance minister Rizal Ramli.

Initially, the government planned to pay out Rp 216.4 billion (about US$19.15 million) to public transportation operators, and in return they would maintain current fares despite an average 30 percent hike in fuel prices.

Yet last week's fuel price hike led to violent demonstrations in several cities, as land transportation drivers took to the street to protest the decision.

Later, the government allowed Organda to increase fares, with the approval of local governments, in regions where its members operate.

Luhut said that the fares should be further raised in the future so that importing new buses, although with a subsidy, would be economically viable.

"The increase in bus fares over the past 10 years has been very low," he said.

He said that, for instance, the fare for air-conditioned buses in 1991 was Rp 1,000 and over 10 years it had only increased to Rp 2,500.

Current fares hardly reflect the past 10 year's soaring inflation, and the sharp fall of the rupiah, he explained.

Based on UI's research, fares for the new buses should be set at Rp 3,000 for air-conditioned buses, Rp 1,300 for regular buses and Rp 1,250 for smaller buses.

Meanwhile, the subsidy will also cover the difference between commercial interest loan rates and the 14 percent per annum on loans that the companies will be offered to buy buses.

Further, the subsidy will include a budget of Rp 20 million per unit for large buses, and Rp 15 million per unit for small or mid-size buses, Luhut said.

He said Organda members could either import the buses or use local manufacturers. "We'll leave it up to them," he said.

Elsewhere, Organda Jakarta chairman Dadan Pahlawan Irawan said that state Bank Mandiri would be the lead arranger in funding the purchase of the new vehicles.

He said the banks, and not the government, would then decide to whom they would lend their money.

"We've never asked for money (from the government), the government won't pay us anything, but instead we'll receive less in revenue," he said.

According to him, some 50,000 buses across the country should have been replaced by now. The current plan covers the purchase of 32,000 buses.(bkm)