JAKARTA: Automotive investment in 2010 is expected to reach IDR 4.8 trillion, or up 39% compared to last year which is predicted at IDR3.458 trillion.To encourage the investment climate, the Ministry of Industry (Kemenperin) will propose the facility of import duty on machineries, goods and materials for industrial development purposes.While temporary data obtained from the ministry discloses the total investment into the national automotive sector in 2010 is predicted to be IDR3.458 trillion, or increase from previous years of IDR3.423 trillion.Along with the increase on the investment, installed capacity of the automotive industry, especially the national four-wheel vehicles reached 900,000 units per year with utilization of 85% in 2010.Director of Transportation Equipment of Ministry of Industry (Kemenperin) Suprijanto is optimistic on the investment forecast in the automotive industry in this year which is estimated at IDR4.8 trillion."The automotive industry is still very promising since the demand is still very large and the ratio of vehicle ownership in Indonesia is still relatively small compared with neighboring countries," he said this week.The current ratio of car ownership in Indonesia, as Suprijanto said, is 1:7, lower than Thailand or Malaysia where the comparison of car owners with a total population of the country has reached 1: 3.The lower ratio of car ownership and big numbers of populations has made Indonesia as a potential market to investors, because demand for vehicles is still high.Suprijanto said the addition of new investments in the automotive sector is still dominated by investments in the components manufacture.Additional investments in industrial assembly are considered not too significant, because many infrastructure of automotive industry can not produced in the country, such as raw materials of metal and plastic components.Increasing the production capacityIn this year, the Ministry of Industry projected the national car production capacity to increase to 1 million units per annum from 2009 which was 900,000 units. As market demand continues to grow, the utilization of automobile industry will also rise to 100%.According to Suprijanto, in investing their funds, investors also see the development of investment climate and facilities that will be provided by governments for relevant industry sectors."Many investors who ask about provided facilities in the automotive sector. For that, policies are needed to encourage investment climate," he said.Suprijanto said the Ministry of Industry is reviewing the Decree of the Minister of Finance (PMK) No. 176/2009 concerning Import Duty Exemption on Imported Machinery, Goods and Materials for the Industrial Development.In the decree the expansion or development of motor vehicle assembly does not get incentive for imported raw materials and equipments."We are reviewing the ministerial decree and would propose incentives of import duty for imported machinery, goods and materials in order to develop the industry. When there is a replacement model of products in the automotive industry, then components and assembly are also experiencing changes," he explained.The review on the incentive for automotive industry, as Suprijanto said, is based on the tight competition in the industry, as the enactment of joint Asean-China free trade, IJ-EPA and others."Each country is competing to provide investment facilities. So we also have to provide incentives, "he said.Investment Coordinating Board (BKPM), previously announced at least there are 18 investors who have filed investment permits in the automotive sector. Five investors come from United States, Thailand, Malaysia, Singapore, Hong Kong, China and Japan.According to data of Ministry of Industry, some new investors in automotive sector as of 2010 who have obtained permits including PT Asian Auto International (PMA) for articulated bus assembly with an investment of IDR40 billion, PT Sigma & Hearts Indonesia for the production of motorcycle components with an investment of US$2 million, PT Indonesia Thai Summit Auto for the production of components with a total investment of US$15 million, PT Indonesia Koito for the production of components with an investment of US$30.1 million.While the Ministry of Industry also recorded some other investors, such as PT Indoprima Gemilang for the production of automotive components with an investment of IDR187.67 billion, PT Minerva Motor Indonesia with IDR73 billion, PT Cable Tech for control cable system with US$2 million, PT Yazuho Auto for automobiles components with IDR14.65 billion.(t03/wiw)
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