Electric Car - Photo by: Ministry of Industry Office

JAKARTA (TheInsiderStories) – Indonesia’s four-wheel car manufacturers face a menace in exports following a new regulation from Vietnam, which is poised to build its own automotive industry.

Vietnam issued in November Decree No. 116/2017/ND-CP on car manufacturing, assembly, importation and warranty offering.

Car importers in Vietnam are now required to obtain a Vehicle Type Approval (VTA) certification, which details incoming vehicles’ quality, safety, and environmental protection. The VTA must be issued by the authorities of exporting countries.

Through the new regulation, Vietnam requires international standards for vehicle safety and emissions. Vietnam acknowledges that cars manufactured in Indonesia comply with the Indonesian National Standard.

However, Oke Nurwan, Foreign Trade Director at Indonesia’s Trade Ministry, disagrees and emphasizes that Indonesia’s standard for cars manufactured in Indonesia complies with international standards because both standards use the same process and test equipment.

Indonesia is the third-biggest car exporter to Vietnam, after Thailand and China. However, the latest regulation can make Indonesia drop in the ranking.

Based on data from Indonesia Statistics, the value of exports of Indonesian passenger cars to Vietnam reached US$241.2 million in the January-November 2017 period, up a whopping 1,256.5 percent year-on-year (y/y) from $17.78 million vehicles in the same period one year earlier.

Indonesia Car Sales 2013-2017

Source: Gaikindo

Indonesia car sales reached 95,892 units in January, rose 11.1 per cent from the same month last year at 86,262 units, the Association of Indonesian Automotive Industries (Gaikindo) data showed.

Car sales of Astra Group, the largest automotive player in Indonesia, sold 45,760 units of cars in the month, 7.2 per cent lower than the sales in the same month last year at 49,311 units. As a result, Astra’s market share in January fell to 48 per cent from 57 per cent in full-year 2017, but edged higher from December at 46 per cent.

This year, Gaikindo targets car sales to reach 1.1 million units, little changed from last year’s car sales of 1.079 million units.

Meanwhile, motorcycle sales in January reached 482,537 units, up 1.8 per cent from the same month last year 473,879.

Email: elisa.valenta@theinsiderstoriescom