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.