Jakarta (ANTARA News) - With a view to protecting the automotive industry in Indonesia, the government will only grant an import tax exemption on cars above 3,000 cc.
"Only cars above 3,000 cc will be exempted," the director general for transportation equipment industries, Budi Darmadi, told ANTARA News here on Sunday.
Some automotive producers in the country were worried that the government might open its market to cars of all categories in the framework of the Japan-Indonesia Economic Partnership Agreement (JIEPA) currently still in the making.
Budi said the government would not liberalize its market for cars of all categories because the automotive industry at home had already developed not only to meet domestic needs, but also for exports.
Under the current circumstances, he said the tax exemption would only apply to cars above 3,000 cc while cars below that would continue to enjoy protection.
"We have not produced cars with engines above 3,000 cc and likely will not do it in the near future or will not completely include it in our development plan," he said.
He said the local market share of cars above 3,000 cc was still relatively small as the cars were still considered a luxury and therefore their tax reached more than 75 percent.
He said the government would not offer to liberalize the market for cars below 3,000 cc to Japan because the domestic industry was just developing the type of cars such as Toyota Innova and Fortuner that have engines above 2,000 cc.
"So far the focus of development is on multi-purpose vehicles, sport utility vehicles and small sedans to meet both the domestic and export market," he said.
Budi admitted that the offer to liberalize the market of cars above 3,000 cc was not yet settled because Japan still sought for the liberalization of cars below 3,000 cc.
"Japan wishes for the liberalization of the market for all categories. We will not open the market of cars that we have already made and will make in the future," he said.
In the 3,000 cc segment Japanese cars will compete with cars from Europe and the US such as Mercedes, BMW and Ford.
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