Roundup: Indonesia's car sales surge following luxury tax cut

0 Comment(s)Print E-mail Xinhua, May 23, 2021
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by Bambang Purwanto

JAKARTA, May 23 (Xinhua) -- The Indonesian government has been successful in boosting car sales following a policy on the cut of a luxury tax, locally known as PPnBM, for cars with 1,500 cc up to 2,500 cc.

The government provides the incentive with a 100-percent discount in the March-May 2021 period, a 50-percent discount in the June-August period, and a 25-percent discount in the September-December period for the medium category and the 4x2 type of vehicles with segments up to 1,500 cc.

The Association of Indonesian Automotive Manufacturers (Gaikindo) said that the government's policy on luxury tax cut as incorporated in a finance ministerial regulation and an industry ministerial regulation on the tax on luxury goods sales has been proven effective as indicated by the increase in the car sales in the country.

Data from Gaikindo showed that the total wholesale car sales were recorded at 78,908 units in April 2021.

Annually, the wholesale car sales in April 2021 was far higher than only 7,888 units in the same month of 2020 when the COVID-19 pandemic just started, followed by the policy on the large-scale social distancing in Indonesia.

Accumulatively, the wholesales car sales have reached 265,934 units in the January-April 2021 period. This realization is 8.65 percent higher than 244,758 units in the same period of 2020.

According to Gaikindo, the car sales in April 2021 were influenced by the effect of the policy on sales tax on luxury goods discount in the automotive sector by 100 percent.

At the opening of an Indonesia international motor show in Jakarta recently, President Joko Widodo was informed by Industry Minister Agus Gumiwang Kartasasmita that the country's car sales skyrocketed following the luxury tax cut.

"The industry minister said there was an increase by 190 percent in the purchase order," he said. "It shows that car producers are overwhelmed by orders, meaning that the automotive industry has revived."

The central bank, Bank Indonesia, reported that the rate of the purchasing manager index on the car purchase during the pandemic was higher than that before the outbreak.

"Based on data issued by Bank Indonesia, now it (the rate) stands at 55 percent compared to 51 percent before the pandemic," Widodo said, hoping the government could maintain the trend at the automotive industry.

The industry minister said the policy on the relaxation of the luxury tax imposed in Indonesia has been proven to encourage the automotive industry to revive amid the pandemic.

According to him, before the government issued the policy on the relaxation of a luxury tax on vehicles, the automotive industry was the heaviest sector and the worst hit by the COVID-19 pandemic.

He said that the automotive sector is one of big contributors to the country's gross domestic product from the manufacture sector as it has a lot of supporting industries and involves small and medium scale enterprises.

Coordinating Minister for Economic Affairs Airlangga Hartarto said Indonesia's sales of four-wheeled vehicles in April 2021 jumped 227 percent year on year as a result of the implementation of the sales tax on luxury goods incentive.

"In March 2021 when the policy got started, the increase in the car sales was recorded at 28.85 percent (year on year) and in April, it was logged at 227 percent," the senior minister told media at a virtual meeting on Wednesday.

Given the fact, the government will continue the implementation of the incentive scheme on sales tax on luxury goods in accordance with the scenario as has been set earlier, Hartarto said. Enditem

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