Taxes on Hybrid Vehicles Set to Be Slashed to Foster Local Industry
Imported low-cost and low-carbon emission vehicles will enjoy lower taxes and import duties after a new government regulation is passed as the nation tries to stave off an energy crisis and reduce its greenhouse gas emissions.
The new rules should be submitted to President Susilo Bambang Yudhoyono in the next six weeks, Industry Minister M.S. Hidayat said on Monday.
“The incentive the government will provide is a luxury goods tax of zero percent. This incentive is given to … [educate] the public about hybrid technology,” he said.
But the minister added that the government wanted manufacturers to build a production base for hybrid cars in Indonesia in the next two years in return.
“Within two years of importing the hybrid models, the producers must set up a local factory for manufacturing hybrid components by boosting the local industry’s capabilities through the transfer of technology,” Hidayat said.
The new policy came after luxury car maker Lexus unveiled four new models soon to be available in Indonesia, including two hybrid cars. The luxury vehicle division of Toyota Motor Corp. said last month that in addition to the conventional fuel-powered RX 350 F-Sport SUV and the convertible IS 300C sedan, it would also import the hybrid RX 450H SUV, which retails for Rp 1.4 billion ($150,000) and the hybrid engine CT 200H hatchback, which costs Rp 700 million to Rp 800 million.
The RX 350 costs a little less at Rp 1.17 billion, while the convertible IS 300C sedan will cost Rp 1 billion.
The government is also preparing for domestic production of hybrid and electric cars, with the Indonesian Institute of Sciences (LIPI) developing several prototypes in the past several years.
As the consumption of fossil fuels has increased drastically in the past few years, the government has asked several automotive companies to begin the mass production of hybrid and electric-powered vehicles by 2014, in line with its promises to reduce national fuel consumption and promote “green” economics.
Several automotive companies including Toyota have said they could not produce hybrid cars in Indonesia by 2013 but might be able to by 2014. Hidayat earlier said Toyota would consider producing a hybrid multi-purpose vehicle that could be sold for Rp 250 million.
Incentives such as import tax reductions would help lower the price of hybrid cars, said Sudirman Maman Rusdi, chairman of the Association of Indonesian Automotive Manufacturers (Gaikindo).