Indomobil asks for annulment of recent import tariff cut

Indomobil asks for annulment of recent import tariff cut

Primastuti Handayani, The Jakarta Post, Jakarta

PT Indomobil Sukses International Tbk., which produces Hino and
Volvo buses, has requested that the government annul its policy
easing import tariffs on buses, spare parts and components for
public transportation, arguing it could scare off investors and
jeopardize the local industry.

"Of course, the policy will have a negative impact on the
local automotive industry. The government should have thrown its
support behind us," Indomobil president director Gunadi
Sindhuwinata said on Wednesday, on the sidelines of the launching
of new Audi A4.

Starting March 10, the government eliminates import duties on
Chinese-made clutch assemblies, timing belts, wheel bearings,
transmission assemblies and engine blocks for public
transportation vehicles. Previous duties ranged up to 15 percent.

Bus chassis fitted with engines have had their import duty cut
to 5 percent from 40 percent, while completely knocked down buses
and commercial vehicles have had their import taxes cut to 5
percent from 25 percent.

Dow Jones reported that Zhengzhou Yutong Coach Manufacturing
Co. and King Long United Automotive Industry Co. were among the
Chinese companies to get the benefit of the tariff reduction.

Previously, the Federation of Indonesian Metal and Machine
Industry Associations (GAMMA) had slammed the government, saying
the latter should have provided additional incentives to local
manufacturers to produce parts and components rather than
encouraging imports.

The government argued that the policy was made to help public
transportation operators minimize maintenance costs, thus
enabling them to limit their fare hikes to less than 10 percent
following March 1 fuel price increase that averaged 29 percent.

Last week, PT DaimlerChrysler Distribution Indonesia asked the
government to reconsider its decision, arguing that the new
import tariff policy could throw 350 of its employees out of
work.

"This policy will not only affect us as a company but also
over 100 of our suppliers, not to mention automotive assemblers
who buy bus chassis from us or other companies," Gunadi
complained.

He added that Indonesia should have learned from neighboring
Thailand.

"The Thai government has provided facilities that have
successfully lured in more investors," Gunadi said. "In the
automotive industry, there are around 200 investors who are
wanting to put their money into Thailand."

With last year's annual sales of around 7,000 buses
nationwide, Indomobil had targeted to sell up to 8,000 buses this
year.

A Hino rear-engine bus chassis is sold for between Rp 300
million (US$31,600) and Rp 400 million, while prices for Volvo
chassis are 50 percent higher.

Hino's chassis -- which takes about 45 percent of the market
-- is used by private public transportation operators including
Mayasari Bhakti and TransJakarta Busway.