President Widodo Encourages the National Automotive Industry to Innovate

JAKARTA (TheInsiderStories) - President Joko Widodo encourage the domestic auto industry to continue to work hard and spawn innovation. He hoped that the Indonesian automotive market can be controlled by the domestic auto industry.

He delivered the speech at the Gaikindo Indonesia International Auto Show 2018 in ICE BSD City, on Thursday (02/08).

The government, he said, is committed to support and assist the automotive’s player. Widodo gave an example, how he resolved the Indonesia’s export to Vietnam when he met with Vietnamese Prime Minister Nguyen Xuan Phuc.

In addition, the government is also preparing a variety of incentives to the national automotive industry. Some of it are tax relief for the automotive industry that invest in activities such as vocational training for workers and others.

Associated with innovation, the President said that Indonesia now requires an innovation in the form of implementation of 20 percent blended biodiesel (B20) to bring more environmentally friendly vehicles. Some countries called has successfully implemented similar policies it.

“Brazil 1970 already implementing vehicle 100 percent use bio-ethanol, made from local produce sugar cane. The period we have millions of tons of oil production and could not solve this,” said President.

With the implementation of this B20, the government has to calculate foreign exchange savings of nearly US$6 billion. In addition, the Indonesian palm oil prices will also be lifted up to $100 per ton.

“The price of crude oil was $70 per barrel and assuming an increase in the absorption of biodiesel will lift palm oil price of $100 per ton. This is a huge jump, ” he added.

The automotive industry is one of the five manufacturing sectors that are being prioritized for its development as it will become a pioneer in the implementation of the fourth industrial revolution in the country according to the Making Indonesia 4.0 roadmap. Moreover, the automotive industry has shown positive performance and has contributed significantly to national economic growth.

“In the first quarter of 2018, the transportation equipment industry grew by 6.33 percent, above economic growth. This sector is also able to contribute up to 10.27 percent of the GDP of the non-oil and gas processing industry,” said Minister of Industry Airlangga Hartarto on August 1.

He also said that the motor vehicle industry and other transportation equipment were included in the top five manufacturing sector investments in the first quarter of this year with a value of Rp3.35 trillion. In addition, the automotive industry in Indonesia has developed into a production base for multi-purpose vehicle vehicles, trucks and pickups for the domestic and Southeast Asian markets.

Based on the ministry data, the performance of the automotive industry in Indonesia has accelerated, as seen from the number of exports in the form of vehicle components which increased by 13 times, from 6.2 million pieces in 2016 to 81 million pieces in 2017. In fact, in the ASEAN market when this, demand in the form of completely knock down is increasing.

The surge also occurred in the figure of the production of four-wheeled motorized vehicles, from 1.18 million units in 2016 to 1.22 million units in 2017. This number was strengthened by the increase in exports of vehicles in the form of CBU as many as 231 thousand units in 2017 compared to 2016 of 194 thousand units. From that achievement, the government targets the number of production in 2020 will increase to 1.5 million units.

The automotive sector in Indonesia has been able to absorb quite a lot of workforce with more than 1.5 million people, which is distributed to various sectors ranging from the assembly industry, first, second and third tier component manufacturers, to official workshops, sales, service and parts.

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