The ministry of industry has prepared economic stimulus for automotive industry to press COVID-19 impact in Indonesia - Photo by SteelGuru

JAKARTA (TheInsiderStories) – The ministry of industry has prepared economic stimulus for automotive industry to press COVID-19 impact in Indonesia. This policy was made to maintain the performance of the industry’ contribution to the national economy.

“Although there are automotive manufacturers whose production has been disrupted due to COVID-19, we ensure the availability of products and parts for motor vehicles,” said director at the ministry of industry, Putu Juli Ardika in Jakarta, in an official statement today (04/08).

According to him, his office has proposed fiscal, non-fiscal, and monetary stimulus to the related ministry and agencies on the new policies. In detail, the fiscal stimulus is in the form of incentives income tax for six months, value added tax refunds also for six months, and a reduction in import duties.

“Non-fiscal stimulus is given in the scheme of simplifying or reducing export and import for raw materials, accelerating the export-import process for reputable traders, and simplifying the import-export process through NLE (National Logistic Ecosystem),” he explained.

Related to monetary stimulus inline with Financial Service Agency Regulation Number 11 of 2020 concerning the National Economic Stimulus as a Countercyclical Policy on the Impact of Coranavirus Disease 2019 and Relaxation of Guarantee Program on BPJAMSOSTEK.

“The proposal of the economic stimulus package for the industrial sector including the automotive industry has entered into a stimulus package phase I and phase II, and currently being discussed again the possibility of providing a new stimulus,” he added.

Furthermore, related to the Phase II stimulus, minister of industry, Agus Gumiwang Kartasasmita, has proposed granting exemption from import duties on the automotive industry. Based on the minister letter, 593 tariff posts are proposed to be granted import exemptions divided into 27 sector groups.

As for the motor vehicle industry sector, trailers and semitrailers, its proposed as many as 45 tariff posts with the April 2013 import prognosis of US$632,170 and a potential lost state of Rp924 billion ($57.75 million).

Ardika noted, that the impact of the COVID-19 outbreak was greatly felt by the national automotive sector. This can be seen from the decline in demand for motor vehicles in Indonesia.

“The number of sales of four or more wheeled vehicles in January 2020 was 80,400units or decreased by 1.1 percent from the previous period, then in February 2020 it was 79,500 units or decreased by 3.1 percent from the previous period,” He said.

In fact, the Association of Indonesian Automotive Industries has delivered a correction of the car sales target in 2020, which is estimated to experience a contraction of 50 percent from the initial targets 1.1 million units, due to declining demand from domestic and abroad.

In addition, another problem faced by the manufacturer is the supply of raw materials and components, especially from countries that apply a lockdown policy. This makes the motor vehicle manufacturing industry forced to look for alternative sources of raw materials and components to maintain production.

“The disruption of the automotive industry also has an impact on the national economy. This sector has a significant contribution to GDP, 3.98 percent in 2019,” adds by Ardika.

US$1: Rp16,000

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