JAKARTA. After  issued incentive to low cost green car producers, the Indonesian government will release incentive for automotive industry.

Under the new policy, the producers of low emission car (LEC) will receive discount on luxury tax on fuel consumption base. “The more economical fuel consumption, the bigger the discount,” said Yan Sibarang Tandiele, Director of Maritime, Transportation and Defense Equipment Industry, Ministry of Industry to Kontan on Thursday (1/9).

For example, the producers of cars that can run 18 to 20 kilometer per  liter of fuel will enjoy a 25 percent luxury tax cut, while the producers of cars that can run above 28 kilometer on one liter of fuel will receive a maximum of 50 percent discount.

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This policy will apply on certain conditions. “The cars must be produced in Indonesia,” Yan said. Another condition, the incentive will go to producers that use locally produced components.  Yan said that the more the usage of local components, the bigger the tax cut.

It is expected that the ne policy will apply in 2017. “We hope that the policy will attract the producers of hybrid cars or environmental friendly cars to produce in Indonesia,” he added. Therefore, the hybrid cars will be more affordable for consumers in Indonesia.

The Chairman of Indonesian Automotive Industries Association (Gaikindo) Jongkie D. Sugiarto said that Indonesians are actually enthusiastic to hybrid and eco-friendly cars. However, most of the consumers are still limited to high-middle income group, as the price is still relatively high. “People will buy if the price is attractive,” Jongkie said to Kontan on Thursday (1/9).

However, Jongkie is pessimistic that the incentive will attract the producers to build car factories in Indonesia, since they have to consider the economic values.

Marketing Deputy Division Head of Toyota Astra Motor  Anton Jimi expressed enthusiasm to the new policy. However, he said that Toyota still has no plan to produce hybrid cars in Indonesia. Toyota has been selling several brands of hybrid cars, such as Camry and Alphard.

Similar with Toyota Astra Motor, Marketing and Aftersales Service Director of Honda Prospect Motor said that they need to learn the feasibility of building hybrid car factories in Indonesia.  So far, CR-Z remains the Honda’s top selling in hybrid car segment. (Translator: Muhammad Farid)