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The Indonesian government will put in place a regulation on the production of low-cost green cars (LCGC) after an automotive manufacturer there invested heavily in green cars, according to a report published by the Antara news agency.

“The ministry of finance will ensure that the LCGC regulation is put in place,” said Ministry of Industry secretary general Anshari Bukhari. He added that the ministry wants to implement the regulation by the end of this year.

Finance Minister Agus Martowardojo has prepared the regulation on LCGC because of the government’s concerns regarding the tax incentives for the production of low-cost cars, according to Anshari. “It also reflects investors’ trust in the government,” he said.

Anshari said the Toyota Group has upped its production capacity of cars that comply with LCGC requirements, among which are an engine capacity of below 1,200 cc and a minimum fuel consumption of 20-22 km per litre. The automaker recently launched the NAV1 eight-seater MPV in the country.

In September, Indonesian-based manufacturer Astra launched the Toyota Agya (pictured) and its Daihatsu Ayla sibling at IIMS 2012, both of which should fall under the LCGC category.

Anshari noted that the policy will boost car production in the country. The Indonesian automotive industry has enjoyed a 7.52% growth as of the third quarter of this year.

“The automotive, steel and food industries have contributed to the national industrial growth significantly,” he said.