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)