Jakarta Globe, ID/Damiana Ningsih, June 5, 2013
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| A model poses next to a car displayed at the Indonesia International Motor Show 2012 on Sept. 20, 2012. (JG Photo/Safir Makki) |
The
government has officially issued a decree to support the production of
low-cost, environmentally-friendly cars in Indonesia, a minister confirmed on
Wednesday.
Industry
Minister MS Hidayat said on Wednesday that President Susilo Bambang Yudhoyono
signed the 2013 decree number 41 on luxury items tax, which includes vehicles,
on May 23. The decree was legalized on the same day by Legal and Human Rights
Minister Amir Syamsuddin.
“This
regulation will cover some programs related to eco-friendly cars, support
conservation of energy use and [the use of] alternative energy, for example
low-cost and green cars, hybrid, electric cars and cars using biofuel. It will
curb taxes and boost demand for greener cars,” he said.
Hidayat
said no luxury tax would be imposed on cars or station wagons with engine
capacity of up to 1,200 cc and with a minimum fuel consumption of 20 kilometers
per liter.
Tax
exemption would also apply to diesel or semi-diesel vehicles of up to 1,500 cc,
also with minimum fuel consumption of 20 kilometers per liter.
The current
tax for new vehicles ranges from 10-75 percent depending on engine size. Only
emergency vehicles, such as ambulances, are tax exempt.
Some
analysts have forecast that the policy could eventually boost Indonesian
vehicle consumption by a third.
Indonesian
auto sales, buoyed by an expanding middle class, hit a record 1.1 million last
year though the figure is expected to be slightly lower this year because of
likely fuel price increases and higher downpayment requirements.
Hidayat
said the automotive industry could now launch eco-friendly car production in
line with the regulation. He added that the regulation was aimed at spurring a
long-term movement toward sustainability, rather than immediate commercial
interests.
“Relating
to the price [of the vehicle], even though there was a pricing set by the
Ministry of Finance, I wish for flexibility. The pricing should be as fair as
possible when complying with the adopted technology. Don’t make it solely as a
commercial purpose,” Hidayat said.
Previously,
Astra International said the company would delay production of its eco-friendly
vehicle, the Ayla, until government regulations on low-cost, green cars were
finalized.
Astra
Daihatsu Motor opened a new plant in Karawang, West Java, in April that has a
production capacity of 120,000 units per year. Daihatsu had set a goal to
produce 3,000 Ayla cars per month in the facility.
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