Govt to review policy on imports of luxury vehicles

Govt to review policy on imports of luxury vehicles

JAKARTA (JP): The government might soon lift the ban on
imports of completely built-up luxury cars with engine capacities
exceeding 4,000cc, Minister of Trade and Industry Luhut Panjaitan
said on Thursday.

"We will immediately change it because we have been warned by
many countries including the European Union that our regulation
violates the international agreement set by the World Trade
Organization," he said on the sidelines of a seminar on trade and
investment.

The country's partial restriction on the import of luxury cars
has raised concern from major car makers grouped in the United
States Automotive Trade Policy Council.

The council, which includes American automakers Ford Motor
Company, DaimlerChrysler and General Motors, recently asked the
government to lift the ban on luxury car imports, calling it
inconsistent with Indonesia's own commitment to liberalize its
automotive industry.

The government decided in July last year to open the country's
automotive market by liberating the import of completely built-up
cars as well as eliminating import duties for car components and
abolishing the national car project.

However, former minister of industry and trade Yusuf Kalla
issued a decree earlier this year reimposing the ban on the
import of certain types of luxury vehicles in an attempt to
reduce "social jealousy."

Ministerial Decree No. 49/2000 bans the import of automobiles
which have an engine capacity of 4,000 cc and above, or a freight
and board price of more than US$40,000. The decree affects all
vehicles which seat fewer than 10 people.

Luhut said the planned change in the regulation was expected
to bring a positive impact to the country's automotive sector as
well as generating more import duty revenues for the state
coffer.

"If the country can receive more money from doing so (changing
the regulation), we will do it," he said.

He said the government would look for a new scheme to support
a fair and healthy competition in the local car market without
having to ban imported cars from entering the country.

However, Director General of Metal, Machinery, Electronics and
Various Industries, Agus Tjahajana, said the government would
still have to control the flow of imported expensive cars in
order to avoid the widening gaps between the rich and the poor.

"It is likely that we will come up with something like higher
import duty and vehicle tax in order to slow down the massive
entrance of expensive cars," he said.

Despite the exorbitant price tags, ranging between Rp 180
million (US$22,500) and over Rp 2.3 billion, demand for
completely built-up imported cars has been increasing as
reflected in the sale of around 2,000 units per month for March
and April respectively, as against an average of 1,000 units sold
per month last year. (cst)