The Indonesian government is looking to further stimulate the automotive industry battered by the COVID-19 crisis by continuing to bear the luxury sales tax (Pajak Penjualan Barang Mewah, or PPnBM) on new vehicles. In fact, the republic is set to announce that it is eliminating the tax altogether next year, according to a number of sources including AutonetMagz.
The catch? Vehicles must have a local content percentage of at least 80% to be eligible. The measure, which was suggested by minister of industry Agus Gumiwang Kartasasmita, will include all Low Cost Green Cars (LCGC) – such as the Toyota Agya, Toyota Calya, Daihatsu Sigra, Daihatsu Ayla, and Honda Brio Satya – as this is the percentage of local content needed to qualify for the scheme.
Other eligible models include the Toyota Innova 2.0, the Mitsubishi Xpander and Nissan Livina siblings, the Toyota Veloz (not its Avanza twin, surprisingly) and the outgoing Honda HR-V. However, Daihatsu and Honda are also claiming that the new Xenia and BR-V qualify for the exemption, with the latter having 84% local content, CNN Indonesia reported.
Agus has previously said that the condition is being put in place to ensure the automotive industry has a positive impact on the domestic economy, which is currently being slowed by the pandemic. He added that the PPnBM exemption is necessary as there are currently 21 companies involved in the local automotive industry, producing 3.5 million four-wheeled vehicles per year.
This does not include the 319,000 parts vendors, which are mostly micro, small and medium enterprises (MSME). The industry also supports 1.5 million workers directly and a further tens of millions indirectly, and has received investments totalling 150 trillion rupiah (RM44 billion).
“The automotive sector was also one of the sectors hardest hit at the start of the pandemic, although now it has grown to 64 percent,” said Agus.
Earlier in the year, the government announced a PPnBM rebate on new vehicles, with the amount exempted varying depending on the local content of the car. The incentive was supposed to last three months but has since been extended to the end of the year. Recently, the government changed the tax calculation, basing it on the car’s carbon dioxide emissions rather than engine capacity.
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Wow so Indon have national car plotek policy even tho they have no cheap national cars for their rakyat. I can see why gojek & tuktuk is popular with the B40 there.
A slap to P1 and P2 faces. Indo 4 – Msia 1
A slap to Indo rakyat faces, paying national car taxes but without cheap national car they can afford.
I mean we got lcgc (low cost green car) program which is very effective for indonesian
Pity you cannot get cars below rm25k. Even Axia export to your country becomes 40k. Who will buy!
Well can’t argue with that but nonetheless 40k still very cheap for us, and nobody (at least here) gonna buy entry level bare bones trim axia/ayla
We average Indonesian don’t buy junk like Axia you know. Why should we buy junk like Axia instead we can buy better cars rather than your junk Perodua Axia.
Yes, continue to pretend as a sleeping hare while the tortoise have long leaving you. Pity us
Jokowi..is very very proactive…look at all the investments from Hyundai,Toyota pouring in..billions of USD,with tax reduction of ckd units.
In Bolehland,politicians are arguing about chopsticks,n reviving a cancelled railway project,arguing who is not wrong in flood management etc..which investor will give a thot about investing in Bolehland’s auto sector?