Japan carmakers eye green car project

Mustaqim Adamrah, The Jakarta Post, Jakarta | Fri, 03/26/2010 8:47 AM

Japan’s four major automobile producers have expressed keen interest to join the government’s program to produce eco-friendly and low-cost cars, Industry Minister M.S. Hidayat said in Jakarta on Thursday.

The minister said representatives of Daihatsu, Toyota, Suzuki and Nissan had all expressed interest.

Speaking to reporters following a meeting with executives of Nissan in his office, Hidayat said executives of Daihatsu, Toyota and Suzuki had met him earlier to discuss the program, expected to begin by 2011.

“They [Daihatsu, Toyota and Suzuki] are very serious. They have all submitted business plans,” said Hidayat, adding Daihatsu had shown the government its prototype.

Hidayat said the low-cost green car program is open to all car producers but interested parties would be selected based on government criteria especially on the proposed local content for car production.

The government is now drafting a regulation on the program, which also involves other ministries and state agencies, as well as regional administrations.

The regulation is expected to be issued by the end of this year.

According to Hidayat, interested producers have requested fiscal incentives such as lower value added and income taxes as well as reduced vehicle tax and vehicle ownership tax, both of which are collected by regional administrations.

According to Hidayat, the market for the low-cost green car which would carry a price tag of between Rp 70 million (US$7,630) and Rp 80 million would be quite promising given the surge in per capita income.

Hidayat said that his eventual aim would be that the local content of the car would be between 60 and 80 percent of its total composition.

“Our income per capita now stands at around US$2,500 a year.

Next year, it will probably reach $3,000,” Hidayat said. In addition to providing affordable cars to Indonesia’s lower-middle class consumers, the program is also designed to build up a stronger base for the country’s automotive industry especially in anticipation of the establishment of the ASEAN economic community in 2015, said Budi Darmadi the Industry Ministry Director General for Transportation, Telecommunication and IT industries.

Because one of this long-term strategic objective to strengthen the Indonesian automotive industry, carmakers taking part in the program should be committed to optimum use of local components in the production of the car, Budi said.

He added that local components should therefore be used in all parts of the car including the body, tires, wheels, interior, engine and transmission.