Investors urge govt to offer incentives

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.