New deregulation measures to boost locar car industry
New deregulation measures to boost locar car industry
JAKARTA (JP): The new package of deregulation measures announced last Friday will boost the local automotive industry even though it will not immediately result in the drop of domestic car prices, according to local car manufacturers.
The chairman of the Indonesian Automotive Industry Association (Gaikindo), Herman Z. Latif, said Saturday that the deregulation announcement is timely because it will strengthen the structure of the country's car component industry.
"We, from the automotive industry, very much welcome the deregulation measures," he said commenting on the new package of reforms announced by Minister of Finance Mar'ie Muhammad and Minister of Industry and Trade Tunky Ariwibowo.
The deregulation measures, mostly designed to boost export- oriented activities, include the removal of tariffs and surcharges on the import of machinery and equipment for automotive plants.
Herman said that the new deregulation measures would encourage local car component manufacturers to strengthen their business activities through restructuring.
"The deregulation has touched the most important part of the automotive industry. As we know, most car components are still imported," he said.
Yongkie D. Sugiarto, the president of PT Citra Mobil Nasional, said that the abolition of duties and surcharges on the imports of machinery and equipment for automotive plants, including raw materials, might also lure foreign car manufacturers to open component plants in Indonesia.
No tax cut
He said that the main problem facing the country's automotive industry is its inability to manufacture cheap, good quality components. "Hence, the deregulation measures provide a good incentive for the country's automotive industry," he added.
Last week's deregulation, however, did not meet most people's expectations -- there were no measures to help lower domestic car prices, now billed as the highest in the world.
"The government has no intention of lowering automotive taxes because the spirit of the deregulation is based on how to boost exports," Minister Mar'ie told newsmen when he was questioned on why the government did not also lower the tax rates on the sales of cars.
"The automotive industry needs no incentive from the government as it is not export-oriented. It is not, therefore, necessary to cut automotive taxes," he said.
Automotive prices in Indonesia are billed as the highest in the world due to the high taxes imposed on vehicles' import and sale. According to local assemblers, at least 65 percent of the vehicle price goes to the government's coffers in the form of taxes. (hen)