JAKARTA - The Ministry of Industry (Kemenperin) said the automotive industry contracted by 16.2 percent throughout 2024.

The Director General of Metal, Machinery, Transportation Equipment and Electronics (ILMATE) of the Ministry of Industry, Setia Diarta, said that this contraction was caused by the weakening of people's purchasing power.

"In 2024, the automotive industry will experience a contraction of 16.2 percent. This decline is due to a weakening of people's purchasing power and an increase in motor vehicle loan interest rates," said Setia in an agenda entitled Prospects of the 2025 Automotive Industry and Incentive Opportunities from the Government at the Ministry of Industry Building, Jakarta, Tuesday, January 14.

Setia said, as one of the sectors that has a significant contribution to Indonesia's Gross Domestic Product (GDP), the automotive industry recorded an estimated decline of IDR 4.21 trillion throughout 2024.

"This decrease has an impact on the backward linkage sector of IDR 4.11 trillion and the forward linkage sector of IDR 3.51 trillion," he said.

He also estimates that the automotive industry will face bigger challenges in 2025 in line with the implementation of the motor vehicle tax increase (PKB) policy as well as the implementation of PKB and Motor Vehicle Name Transfer Operations (BBNKB).

Realizing the importance of the automotive sector for Indonesia's economic contribution and the challenges faced this year, said Setia, the Ministry of Industry has actively submitted proposals for incentives and policy relaxation to relevant stakeholders.

A number of these proposals include government-borne PPBnM incentives (PPBnM DTP) for hybrid vehicles (PHEV, Full, Mild) of 3 percent and Government-borne VAT incentives (PPN DTP) for EV vehicles of 10 percent to encourage the electric vehicle industry.

The last proposal is the postponement or relief of the implementation of PKB and BBNKB opsen, which currently has 25 provinces that have issued regulations related to the relaxation of PKB and BBNKB options.

"This policy is expected to be able to provide real support for the sustainability of the national automotive industry and maintain its competitiveness in the domestic and global markets," he concluded.


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