Indonesian Automotive Industry Pushed to Look to Foreign Markets

KOMPAS/RIZA FATHONI

President Joko Widodo inaugurated the opening of the 2023 Indonesia International Motor Show (IIMS) exhibition accompanied by the President Director of PT Dyandra Promosindo Daswar Marpaung, Coordinating Minister for the Economy Airlangga Hartarto, Chairman of the MPR Bambang Soesatyo, CEO of Kompas Gramedia Lilik Oetama and Cabinet Secretary Pramono Anung (left to right) at the JI Expo , Kemayoran, Jakarta, Thursday (16/2/2023).

JAKARTA, KOMPAS — Seeing bright prospects with significant sales growth, the Indonesian automotive industry is encouraged to target the export market to generate an important source of foreign exchange. The development of the domestic electric vehicle ecosystem is also urged to continue to increase.

That is the message and hope President Joko “Jokowi” Widodo conveyed in his speech to mark the opening of the 2023 Indonesia International Motor Show (IIMS) at JIExpo in Jakarta on Thursday (16/2/2023). Attending the opening ceremony were the People’s Consultative Assembly (MPR) chairman Bambang Soesatyo, Coordinating Economic Minister Airlangga Hartarto, Cabinet Secretary Pramono Anung, Kompas Gramedia CEO Lilik Oetama and PT Dyandra Promosindo President Director Daswar Marpaung.

The President’s confidence in the national automotive industry’s prospects is built on data of cars sold in 2022 reaching 1.05 million, which showed an 18 percent rise on an annual basis from 2021. Motorcycle sales increased by 3.3 percent on an annual basis to 5.2 million units for the same period. The President encouraged the automotive industry to also look to foreign markets.

Also read:

> IIMS 2022 Drives Automotive Industry

> RI Races to Become a Key Player in Electric Vehicles

“The automotive industry has a significant impact on the economy, apart from problems with congestion. Therefore, we will continue to make a push to export markets. While bringing more added value, [exports] also generate foreign exchange," the President said.

Indonesia experienced a significant increase in exports of four-wheeled vehicles from 300,000 units in 2021 to nearly 600,000 units in 2022. However, Indonesia's exports of four-wheeled vehicles were reportedly still lagging behind Thailand and the President hoped that the national automotive industry would strive to step up its exports.

Electric vehicles

Regarding the development of electric vehicles in the country, the President pointed out the need to ramp up the industrial ecosystem from upstream to downstream. Given the growing trend in electric vehicles around the world, he urged domestic automotive industry players to catch up by starting to shift their production from conventional to battery-based electric vehicles.

"We will continue to make a push, connecting it with industrial development related to EV [electric vehicle] batteries. We will be making our efforts," he said.

KOMPAS/TOTOK WIJAYANTO

The first day of the Indonesia International Motor Show 2023 automotive exhibition at the Jakarta International Expo, Kemayoran, Thursday (16/2/2023). The exhibition will be attended by around 150 participating brands and will last until February 26.

Responding to a question about incentives, he promised to provide them for the purchase of two-wheeled and four-wheeled electric vehicles, with the former being the first priority to deliver. He added that the mechanism was still being studied by the Finance Ministry.

“[I have got reports] there are those who have to wait for a year [to have their ordered electric cars delivered]. They have been waiting for two months, six months,” he said, believing that the planned provision of incentives would encourage the purchases further. “However, they [incentives] are still being calculated," he said.

The government previously announced it would provisionally allocate electric vehicle incentives worth Rp 5 trillion. The incentive for electric car buyers was planned to be around Rp 80 million, while for hybrid-car buyers, it was around Rp 40 million. Electric motorcycle buyers would receive an incentive of Rp 8 million, while Rp 5 million would be apportioned for conventional-to-electric motorcycle conversion.

IIMS exhibition

The 2023 IIMS features more than 45 brands of four-wheeled and two-wheeled vehicles, including electric vehicles, which Lilik Oetama said was indicative of positive growth in the national automotive and manufacturing industries as the Covid-19 pandemic was largely getting under control. He said the increasing trend was also an indicator of Indonesia's improved economy, which recorded a growth of 5.31 percent in 2022.

The IIMS is being held to support the government’s green program, which expects 20 percent of vehicles produced in Indonesia in 2035 to be low carbon emission vehicles (LCEV). "We are here to support this program through the participation of the electric vehicle sector in the IIMS," Lilik said.

IIMS 2023 project manager Rudi MF said a hall is specially designated to exhibit electric vehicles as a clear evidence of support for the development of electric vehicles in the country. "Out of a total of 45 vehicle brands, there are 15 electric vehicle brands, comprising 14 motorcycle brands and one electric car," he said.

We are here to support this program through the participation of the electric vehicle sector in the IIMS.

He said the IIMS being held at the beginning of the year was expected to catch the public’s enthusiasm about vehicles, especially ahead of this year’s Idul Fitri-related homecoming season. The event, which takes place from 16 to 26 Feb., is targeting 400,000 visitors and a transaction value of Rp 3.8 trillion.

Visitors are charged an entrance ticket of Rp 50,000 per person on weekdays and Rp 85,000 on weekends. Ticket holders are also given free access to Kompas.id for three months.

This article was translated by Musthofid.