Investors urge govt to offer incentives
Evi Mariani, The Jakarta Post, Jakarta
Japanese businessmen in Indonesia asked on Friday the government to provide tax incentives for investors interested in the country's auto parts industry.
They made the call during a meeting with Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti in response to the government's current efforts to boost the development of the auto parts industry.
"I asked them to wait until the taxation law was amended," Dorodjatun was quoted by news portal detikcom as saying after the meeting.
The government has been, for decades, seeking to make Indonesia an auto manufacturing hub in the region, but many auto manufacturers are still reluctant to manufacture their products here, for various reasons, including the underdeveloped auto- parts industry.
In a seminar earlier this week, president director of Japanese External Trade Organization (Jetro) Hiroyuki Kato said Japanese automakers were basically interested in investing in the country's auto parts industry to support their auto production in the country and the region. However, they were reluctant to do so because of a number of shortcomings, including the lack of incentives from the government.
He said that in Indonesia, second to Thailand in the Southeast Asian auto manufacture business, there were only 163 auto parts companies affiliated with Japanese automakers compared to 360 in Thailand.
In China, he said, Beijing has given foreign companies a 100 percent tax exemption for the first three years and a 50 percent tax cut for years four and five as an incentive to woo them into the country.
On Thursday, the chairman of Southeast Asia's Japan Automobile Manufacturers Association Inc. (JAMA) Hiroyuki Nakamura, based in Singapore, visited Jakarta to launch JAMA's annual auto industry report.
On the occasion he said JAMA would extend its technical assistance to the auto parts industry in Southeast Asia.
"We have received a request from the Indonesian government for JAMA to extend our auto parts training program," Nakamura told reporters. "We will start the program again in October this year."
JAMA has sent auto parts experts to small and medium-sized auto parts companies supplying Japan's automakers in Thailand, the Philippines, Indonesia and Malaysia from August 2001 until the end of this month.
Nakamura said that the objective of the training was to push technology transfer in the auto parts industry, thereby strengthening the automotive industry.
In Indonesia, the program has been conducted in 25 companies with 16 foreign experts training local engineers.
Nakamura said he hoped the government would also appoint some Indonesian engineers to assist in the program to make the technology transfer faster.
Recently, the Ministry of Trade and Industry's director for land transportation M. Setiono admitted that the government wanted to focus on the development of the auto parts industry in a bid to strengthen the auto manufacturing industry.
"We hope to assist auto parts companies to get as many customers as they can. For example, we'd promote the import of completely knocked-down (CKD) cars over completely built-up (CBU) ones," he said.
Import tariffs on CKD cars now stands at 25 percent, on CBUs it is 45 percent.