The Contribution Of The Automotive Industry To The National GDP Is Estimated To Drop By IDR 4.21 Trillion Throughout 2024

JAKARTA - The target for car sales in Indonesia will drop to around 850,000 units by 2024. This figure was revised last October, after early 2024 sales are targeted to reach 1 million units.

With the decline in people's purchasing power which affects the sale of new cars, it also has an impact on the contribution of this industry to Gross Domestic Product (GDP).

The Director General of Metal, Machinery, Transportation Equipment and Electronics (ILMATE) of the Ministry of Industry, Setia Diarta, estimates that the automotive contribution will decrease by around Rp4.21 trillion to GDP throughout 2024.

"If we look at 2024, the significance of GDP, our automotive industry is expected to decrease by IDR 4.21 trillion in 2024. We can see the impact of this decline in terms of input and output, both in the backward linkage and in the forward linkage," said Setia on the agenda titled the Prospects of the 2025 Automotive Industry and Incentive Opportunities from the Government at the Ministry of Industry Building, Jakarta, Tuesday, January 14.

Backward linkage can be known as an input side, in which there are a number of related industries that are driving or supplier-supply for the automotive industry.

"Then we also calculated forward linkage. We tried analysis and we were also able to see that the output of these industrial sectors has decreased," he said.

In total, the Ministry of Industry noted that the automotive industry's backward linkage decreased to IDR 4.11 trillion, while the forward linkage fell by around IDR 3.51 trillion, compared to 2023.

Setia hopes that this year will be a moment for the return of the automotive industry to contribute more to the National GDP. Therefore, the Ministry of Industry has prepared various relaxation policies.

For example, the provision of PPBnM incentives borne by the government (PPBnM DTP) for hybrid vehicles, namely Plug-in Hybrid Electric Vehicle (PHEV), full hybrid and mid hybrid of 3 percent and VAT incentives Borne by the Government (VAT DTP) for EV vehicles by 10 percent to encourage the electric vehicle industry.

The last policy is the postponement or relief of the implementation of motor vehicle tax opsen (PKB) and Motor Vehicle Transfer Fee (BBNKB). It is known that currently there are 25 provinces that have issued regulations related to the relaxation of PKB and BBNKB opsen.

"Given that this automotive sector is very important for our economic growth, in 2025 we also come with several new policies, proposing new (incentive) policies," he said.