JAKARTA— The Association of Indonesia Automotive Industry (GAIKINDO) was summoned to meet with RI President Mr Joko Widodo to discuss about tax holiday as incentive for automotive industry. They met in Jakarta on Tuesday 13 October 2015.
Automotive industry needs tax holiday in order to strengthen its structure to help develop domestic industry of car components. So far, Indonesia only has 600 car component manufacturers, compared to that of 2,000 that Thailand has.
To the President, GAIKINDO also emphasises the importance for Indonesia to improve its competency in laboratory tests at the light of the ASEAN Economic Community that will begin in effect by December 2015. The improvement of laboratory test competency includes test devices, system, and human resources. Once Indonesia has competent laboratory test capacity, the automotive industry no longer needs to test the car that they produce abroad, which saves time and costs.
The President was reported to make very positive respond about the suggestion. He seriously supports and encourages Indonesia’s automotive industry to develop.
At present, Indonesia’s automotive industry has some 1.9 million units of annual production capacity. By August 2015 Indonesia produced 740,000 units of cars. In 2015 Indonesia exported 200,000 units of cars. Meanwhile, domestic car sales in 2014 reached 1.2 million units. In 2015 domestic car sales are expected to slow down by 19% to 950,000 units or at most 1.2 million units.
Automotive industry in Indonesia creates 1.3 million work forces. This sector also contributes IDR 70 trillion to national income and some IDR 31 trillion to local government’s income. GAIKINDO realises that lower taxes imposed upon some models will spur opportunity to manufacture them in Indonesia, both for domestic market and export with competitive price.