Govt lifts ban on imports of luxury cars

Govt lifts ban on imports of luxury cars

JAKARTA (JP): Minister of Industry and Trade Luhut Pandjaitan
revoked on Friday a decree that banned the import of luxury cars,
but will impose a high rate of duty to replace the ban.

Ministerial Decree No.192/2000 revokes decree No 49/2000,
which then minister of industry and trade Yusuf Kalla issued last
February to ban the imports of luxury cars.

"To remain consistent with regulations of the WTO (World Trade
Organization), we have revoked the ban on imports of luxury
cars," Luhut said in his opening speech at the seminar on the
evaluation of the 1999 car industry deregulation and its impact.

Yusuf's decree prohibited imports of cars and sport utility
vehicles with engine capacities exceeding 4,000 cc and 5,000
respectively, or with price tags of US$40,000 and above.

The decree was based on social consideration, as the import of
such luxury cars could increase social jealousy.

Yusuf argued that his decree was not a violation to WTO's
principle of an open market, as it did not discriminate between
any specific car brands.

But Luhut said that a monitoring team comprising automotive
experts, industry practitioners and the government had found it
necessary to revoke the decree.

The team concluded that importing luxury cars were harmless to
the local automotive industry because of their insignificant
sales volume, the ministry's media statement said.

The team further concluded that banning luxury car imports was
against WTO's principles and that it also opened opportunities
for smuggling activities, the statement said.

"We have to follow the opening global market," Luhut later
told reporters.

He said that lifting the ban would not destroy the local
automotive industry, and that instead the industry should adapt
itself to the conditions of the global market.

To compensate for the lifting of the ban, he added, the
government would impose a high rate of duty on the imports of
luxury cars.

"Somewhere between 130 percent to 135 percent," Luhut said.

Director general for Machinery, Electronics and Miscellaneous
Industries Agus Tjahjana said imposing a 130 percent duty or
higher was too high.

Agus said he could not estimate how high the duty rate would
be imposed because such a decision would be made by the Ministry
of Finance.

However, technical director of customs at the Customs and
Excise Office Heriyanto Budisantoso said that thus far he had not
heard of any plans to raise the tax rates for luxury cars.

Heriyanto said that with the removal of the ban, the previous
import duty of 80 percent should be reimposed.

According to the existing regulation, imports of cars with
engine capacity of above 3000 cc are subject to 80 percent import
duty.

But chairman of the Association of Indonesian Automotive
Industries (Gaikindo) Bambang Trisulo welcomed the move, saying
the removal of the ban would create healthy competition in the
market.

"It will be a win-win solution," Bambang said, "that could
solve many things."

Importers would still be able to sell luxury cars while the
government would enjoy greater income without violating WTO's
principles, he said.

Bambang also said that the lifting of the ban would not harm
the local automotive industry.

"We need the challenge," he said. (bkm)