JAKARTA: The multifinance industry doesn't believe that the upcoming subsidized fuel restriction policy at the end of the first quarter of 2011 will have negative effect on the industry.
The industry views the negative effect will only last for three months, thanks to strong demand for vehicles.Secretary General of the Multifinance Companies Association (APPI) Roni Haslim revealed demand for cars would remain strong as long as the transportation system in Indonesia had not been significantly improved. Moreover, car drivers could be categorized medium- and high-income people, leading the subsidized fuel restriction policy not to affect the multifinance industry much. "The negative effects on the multifinance business performance will only last for no longer than three months. Do you think it is possible car drivers will switch to public transportation because of the fuel price hikes?" he said last weekend. President Director of PT Adira Dinamika Multifinance Tbk (Adira Finance) Stanley Setia Atmadja argued the government policy in the long-term would not have significant effects and would not correct the growth of the multifinance industry. However, he admitted the subsidized fuel restriction policy in the short-term might force some multifinance companies to reduce their lending. "There may be effects in the short-term, but they won't be significant. We can learn from the experience when the government last raised fuel prices." The government plans to restrict the purchase of subsidized fuel. Previously, the government wanted to prohibit cars manufactured from 2005 and beyond from buying subsidized fuel starting January 1, 2011. However, after the deliberation with the House, the plan is later delayed to the end of the first quarter of 2011. The House also requires the government to run a comprehensive review of the plan. Stanley concluded that it was small chance that automotive lending would decline. (wiw)
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