Indonesian Govt Removes Import Duty for Automotive Industry

The government of Indonesia has issued a new rule to exempt import duties for machinery and goods used in automobile production facilities in a bid to promote the implementation of low-cost green cars.

The Finance Minister Regulation revised a previous regulation by including the automotive industry, particularly the assembling sector, as the receivers of the incentives, Industry Ministry director general for high-technology priority industries Budi Darmadi said on Tuesday.

"We expect that the incentive will help boost investment for the low-cost and green car projects," he told The Jakarta Post. Previously, the duty free incentives were given only to other industries.

Several automakers have been said to have joined the project and made new investments, including Astra Daihatsu Motor and Toyota Astra Motor.

Budi further said that the duty-free facility would apply to a wide range of machines used in a series of assembling activities, including pressing, stamping and welding, which at present were subjected to import duties from 7.5 percent to 15 percent.

"However, the automobile producers can receive the facility as long as 30 percent of the equipment used in their plants are locally made," he said, adding that the incentive would apply within four years after the firms proposed the request and would be implemented for both new investments and extended investments.