Joko Under Fire From Central Government After Discrediting LCGC Scheme

By Jakarta Globe on 10:26 am Sep 16, 2013
Category Featured, Jakarta, News

More buses, not cars, are what Jakarta needs, Joko says. (Reuters Photo/Beawiharta)

More buses, not cars, are what Jakarta needs, Joko says. (Reuters Photo/Beawiharta)

Jakarta Governor Joko Widodo has won both support and condemnation for his criticism of a government policy that lowers the cost of ownership of cars with small-capacity engines.

Muslich Zainal Asikin, a member of the nongovernmental Indonesian Transportation Society (MTI), said over the weekend that he agreed with Joko’s argument the policy would lead to an increased number of cars choking Jakarta’s already chronically congested streets.

“He is right to disapprove of this policy,” Muslich said as quoted by Detik.com.

“It goes against his own program to reduce the number of privately owned vehicles cars on the streets.”

He noted that “that’s why many of the inner city toll road [projects] are being postponed, because if people are given more road space to drive on, they are less likely to switch to public transport.”

Muslich added that the MTI would call on the government to focus on providing decent mass transportation to encourage drivers to leave their cars at home.

Click to read: Jakarta’s Governor Stands by His Record as Critics Take Aim

Click to read: Jakarta’s Governor Stands by His Record as Critics Take Aim

Joko, responding to the government’s policy following the launch of two cars from automakers Toyota and Daihatsu that take advantage of the Low Cost Green Car tax break, said he disapproved of the measure because Jakarta’s streets were already beyond capacity.

However, he acknowledged that he was powerless to stop the policy because it was already in force.

“It has already become a policy. So, what can we do about it?” the governor said last week.

“There’s no point asking about it, it’s the central government’s position.”

He added that all that his administration could do was take measures to anticipate the surge of new vehicles hitting the city’s streets.

These include a proposal to restrict car usage to alternate days of the week depending on whether their license plates end in odd or even numbers; and a plan to set up an electronic road pricing scheme to remotely charge motorists for entering certain parts of downtown Jakarta.

But the MTI has argued that before any of these measures are taken, the number of public buses on the city’s streets must be increased. Danang Parikesit, the chairman of the MTI, said Joko’s office should first make improvements to the capital’s public transportation system before rolling out any new traffic control system.

“Preparations are needed regarding the capacity of public transportation and whether or not it is sufficient, because there are going to be about three million passengers that need to be carried,” he said recently.

“Is the number of public transportation vehicles enough? It’s best to plan far ahead and to make good preparations to minimize potential disruptions.”

While resonating with the MTI, Joko’s criticism of the LCGC policy has struck a nerve with the central government, which has justified the measure as an important step toward extending the privilege of car ownership to Indonesia’s burgeoning middle class.

Industry Minister M.S. Hidayat said he felt the governor was overreacting in his response to the launch of the Toyota and Daihatsu hatchbacks.

“Please tell Joko this is intended for the lower- and middle-income people, the people who also love him,” Hidayat said last week.

“He should allow them to have the chance to buy low-cost cars.”

He added there was nothing wrong with giving people the opportunity to buy a car if they could afford it, and said that low-income families had just as much right to car ownership as high-income ones with multiple cars.

“You should also give lower- and middle-income people the right to own a car. After 68 years of independence, why are we still making it difficult for them to buy a small car?” he asked.

Hidayat said the LCGC program was not intended only for Jakarta, but for the entire country.

The recently launched car models that comply with the LCGC policy are the Toyota Agya and Daihatsu Ayla, identical cars with different badges, and the Honda Brio Satya. They range in price from Rp 76 million to Rp 120 million ($6,660 to $10,500).

“They’ve already been launched, not just for sale in Jakarta but all across Indonesia,” Hidayat said.

“So Joko shouldn’t worry because they won’t only be in Jakarta.”

The minister said that problems related to increased traffic congestion could be overcome with infrastructure development and traffic management.

“Infrastructure building has to be speeded up. There are several other ways in which we can tackle the traffic. For example, traffic management needs to be improved and there should be stricter enforcement of the law on traffic violators,” Hidayat said.

Erik Satrya Wardhana, a deputy chairman of the House of Representatives’ Commission VI, overseeing trade and industry, said he could understand Joko’s concerns about the LCGC program’s impact on traffic in the capital.

“The Jakarta administration needs to accelerate the procurement of sufficient and decent public transportation,” he said on Sunday.

He said that in addition to clogging up the streets, the anticipated surge of cheap new cars would also contribute to the city’s poor air quality.

He added that he disagreed with the government’s decision to make these all-gasoline models eligible for the luxury tax exemption under the LCGC, saying that only truly “green” cars running on other fuel sources should have been eligible.

Erik said this should include those running on compressed natural gas, electricity, hydrogen or hybrid fuel systems.

He also said that the LCGC program would serve as an incentive for foreign carmakers with small-capacity models in the works, and a disincentive for local producers trying to break into the market with higher-capacity models that would not be eligible for the tax exemption.

Joko has previously sought to champion the domestic car industry.

“It raises questions about how seriously the government is taking the idea of developing Indonesia’s own national car industry,’’ Erik said.

He called on fellow legislators to keep tabs on the percentage of locally produced parts in the new LCGC models, which the government says must be 80 percent of the car.

He said that if this proportion was met, then the LCGC program could have a long-term benefit by supporting the domestic auto parts industry .

  • Pelan2

    Just move ahead Mr. Governor. Your critics all have ulterior motives and trying to discredit your efforts..

  • Bang Koja

    Well, someone is definitely going to be out of a job once Jokowi is the President. Mr. Governor, your tasks are clear: revise the city’s procurement and bidding system; update the city’s public transportation system as quickly as you can; and finally, make it so that owning & operating multiple vehicles by a single resident become an expensive proposition (e.g., implementation of ERP system, higher public parking fees, tough/expensive annual vehicle inspections/taxes, etc.) in Jakarta.