The Association of Indonesian Automotive Industries reported, the realization of car sales in February fell by 38.22 percent to 49,202 units compared to last year sold 79,644 units - Photo by GAIKINDO Office

JAKARTA (TheInsiderStories) – The Association of Indonesian Automotive Industries (GAIKINDO) reported, the realization of car sales in February fell by 38.22 percent to 49,202 units compared to last year sold 79,644 units. When compared to the previous month, the car sales dropped by 7.5 percent from 52.909 units.

The chairman, Yohannes Nangoi, as quoted by Kompas, commented, “Some prospective buyers hold their spending because there is a tax incentive of up to 100 percent on March 2021.”

As reported, the government has gave a tax incentives to the auto-maker to support their businesses. The incentives will be given in stages starting March until the end of 2021. In the first stages, the government set zero percent of value added tax (VAT), followed by 50 percent of rate in the second stage, and 25 percent in the third stage.

According to senior economic minister, Airlangga Hartarto, the amount of this incentives will be evaluated every three months. Based industry ministry data, its calculated that the auto production will increases to 81,752 units per month. He said, the additional output of the automotive industry are estimated to be able to contribute to the state revenue around Rp1.62 trillion (US$112.5 million).

He noted, the recovery in production and sales of the automotive industry will have a broad impact on other industrial sectors, because these sector is closely related to other supporting industries. “We hope with the incentives, the consumption of middle-income people will increase and drives the economic growth in the first quarter of this year,” said the minister.

Beside tax incentives, to boost the public purchasing power and national economic recovery, President Joko Widodo’ administration has prepared Rp372.3 trillion. And to help the weak of purchasing power and the consumer loans market, BI has decided to lower the down payment limit for motorcycles and unproductive three-wheeled vehicles from 10 percent to zero percent.

The three-wheeled vehicles or more that are productive also cut to zero percent from the original 5 percent and will take effect from Oct. 1, 2020. The governor, Perry Warjiyo, said the decision has been made to boost the public consumption and to accelerates the economic growth of the country.

Based on the central bank data, the inflation remains low due to weak domestic demand. In addition, the FSA also plans to give an incentives for the purchasing and credit distributions for the electric vehicle (EV) in Indonesia.

The agency provided the incentives in the form of providing funds to debtors for the purpose of purchasing EV or developing upstream industries, such as batteries, charging station industries, and component industries that can categorized as fulfilling the provisions for the implementation of sustainable finance.

Provision of funds for the purchase of EV and their infrastructure can be categorized as a government program that is exempted from the maximum credit limit, if its guaranteed by state-owned and local government or insurance financial institutions, inline with the FSA regulation Number 38/POJK.03/2019, concerning the Legal Lending Limit and Large Funds Provision.

While, president director of PT Astra International Tbk (IDX: ASII), Djony Bunarto Tjondro, optimistic the domestic car sales could reach 750,000 units, as projected by the association. Last year, one of the largest automotive company contributed 50.76 percent of total car sales 270,076 units.

US$1: Rp14,400

Written by Editorial Staff, Email: theinsiderstories@gmail.com