(The Insider Stories) – Indonesia has released presidential decree no 41/2013 exempting Low Cost Green Cars (LCGCs) and Low Carbon Emission (LCE) cars with engine capacity of 1,000-1,200 cc from the luxury sales tax. Under the regulation, special tax incentives will be provided for vehicles that fall under the LCGC category.

Industry Minister M.S. Hidayat said President Susilo Bambang Yudhoyono signed the new law on May 23rd, allowing LCGC and LCE to be produced locally. The industry ministry later will release details on the implementation of the presidential decree.

Industry Ministry director general Budi Dharmadi says five automotive companies plan to invest US$3 billion and 100 component producers US$3.5 billion in LCE cars and LCGCs.

PT Toyota Astra Motor president director Jhonny Darmawan said the new rules are a breath of fresh air for car producers, who are ready to produce LCGCs and LCEs. TAM plans to produce two types of LCGC – the Ayla and Agya models.

PT Honda Prospect Motor director Jonfis Fandi said the company plans to produce LCGCs and expects to sell 100,000 units.