Indonesia is Optimistic to Become a Manufacturing Hub in ASEAN
The national car sales have not yet recovered in early 2021 showed by the association data in January the producers only sold 52,910 units, down 8 percent from to the previous month about 57,507 units - Photo by Industry Ministry Office

JAKARTA (TheInsiderStories) – The national car sales have not yet recovered in early 2021 showed by the association data in January the producers only sold 52,910 units, down 8 percent from to the previous month about 57,507 units. When compared to last year, the sales fell by 34 percent, wrote the data.

The Association of Indonesia Automotive Industries (GAIKINDO), reported Toyota is still the market leader among the producers, sold 16,047 units, Mitsubishi 9,108 units, Daihatsu 8,993 units, Nissan 100 units, and Peugeot only sold 34 units. This year, the organization hope the automotive market to rebound helped by various policies and stimulus produce by the government. They forecast to sell 750,000 units of autos in this year.

Last week, senior economic minister, Airlangga Hartarto, said the government will give a relaxation to the automotive industry to support the economic recovery program. The incentives will be given in stages starting March until the end of 2021. In the first stages, the government set the zero percent of value added tax (VAT), then half of the existing rate in the second stage, and 25 percent of the implemented tax in the third stage. He adds, the amount of these incentives will be evaluated every three months.

Based on industry ministry data, its calculated that the auto production will increases to 81,752 units per month. The additional output of the automotive industry are also estimated to be able to contribute to the state revenue around Rp1.62 trillion.

Hartarto 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. He stated, “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.”

In 2020, Indonesian car sales dropped by 48.35 percent during 2020 depressed by the COVID-19 pandemic. According to GAIKINDO, during of last year, the car-maker only sold 532,027 units from 2019 around 1.03 million units.

The organization also noted, the worst auto sales occurred in April since the crisis in 1998, only sold 7,868 units or subsided by 90.63 percent compared to April 2019, which recorded 84,056 units. While, the highest sales happened in January, when sales touched 80,435 units in a month.

In detailed, passenger car sales such as sedans, 4X2, 4X4, still dominate with a percentage of 73.1 percent or 388,886 units. Then, the commercial vehicle sales increased 26.9 percent or 143,141 units. This year, the association hope the automotive market will recover than last year and could sell 750,000 units of car.

To boost the public purchasing power and national economic recovery, President Joko Widodo’ administration has prepared Rp372.3 trillion (US$26.59 billion). 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 in Indonesia.

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 No. 38/POJK.03/2019, concerning the Legal Lending Limit and Large Funds Provision.

US$1: Rp14,000

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