The government will launch a fiscal incentive scheme to support the cheap car program for rural areas. MS Hidayat, the Industry Minister, said that the facilities include a waiver of import tax on equipment and raw materials and parts which cannot be produced locally, and a fiscal facility for domestic and export market creation.
“A lower luxury tax for domestic market based on manufacturing level achievement and import facilities are provided for products for export, with related verification,” he said, Monday.
The fiscal incentives package is expected to develop the low cost and green car industry.
Hidayat said that other supporting policies under preparation include the establishment of technical requirements and the level of domestic manufacturing. This means that engines with fuel consumption above 20 kilometers per liter, transmission and body will be produced domestically to the full manufacturing level.
The Ministry also budgeted Rp 114 billion to support car development in 2012. The rural village car is designed with a 650 cc engine capacity.
To increase production, the government will provide production machinery for private companies, particularly for small and medium enterprises. This includes engines, expert staff, gas converters, as well develop research products, gas fuel converters and engine control units.
There are two low cost car programs, one priced at Rp 50 million per unit and the other at Rp 85 million per unit. For the Rp 50 million unit, the government appointed PT Industri Kereta Api Indonesia (INKA), GEA car producer, and PT Super Gasindo Jaya, Tawon car producer.
According to the IFT Research Department, government efforts to support the national car project should be supported as it is for the general public. The most important factors include quality, spare-parts and after sales service availability.
Indonesia can learn from the Malaysian national car, Proton and Perodua. This is the result of a government partnership with Japanese automotive producers. Proton uses a Mitsubishi engine and Perodua uses a Daihatsu engine. Quality is a priority as the cars can compete with other brands in the Malaysian and Asian markets.