There Is COVID-19, The Ministry Of Industry Seeks To Strengthen The Competitiveness Of The Domestic Automotive Industry

Minister of Industry, Agus Gumiwang Kartasasmita. (Photo: Ministry of Industry)

JAKARTA - The Ministry of Industry continues to support strengthening the competitiveness of the domestic automotive industry by deepening its manufacturing structure. The strategic steps taken include encouraging increased investment to grow the vehicle component industry.

"Currently we have around 700 component industries that support the automotive sector. This number needs to be boosted, but the most important thing is that we must optimize the existing potential to increase added value in the country, "said Minister of Industry Agus Gumiwang Kartasasmita in Jakarta, Friday, March 6.

The Minister of Industry emphasized that the automotive industry is one of the five manufacturing sectors that have priority development, especially in readiness to enter the industrial era 4.0. This is in accordance with the implementation of the Making Indonesia 4.0 road map.

"So far, the automotive industry has made a significant contribution to the national economy, including a role in the growth of Indonesia's manufacturing PMI index," he said.

Based on a report released by IHS Markit, Indonesia's manufacturing Purchasing Managers Index (PMI) has increased from 49.3 in January to a position of 51.9 in February 2020. Points above 50 indicate that the industry is in an expansionary phase.

Meanwhile, other contributions are shown from the export achievements of four or more wheeled motorized vehicles which show a positive trend. In 2019, the number of Completely Build Up (CBU) vehicle exports was recorded at 332 thousand units, an increase of 25.5 percent from the previous year. In addition, Completely Knock Down (CKD) vehicle exports amounted to 511 thousand sets, an increase of 523.5% compared to 2018.

Agus believes, the pace of the automotive industry in the country can still be accelerated this year, despite the global economic pressure and the impact of the corona virus outbreak. The Ministry of Industry also sets a growth target for the automotive industry to reach 6 percent by 2020.

"We all have to have a spirit of optimism in building industry, because it will have a broad impact on the economy, such as increasing foreign exchange earnings and employment," he explained. Concrete efforts need to be made through synergies between the government and industry players.

Therefore, the government is determined to create a conducive business climate for the industrial sector, including by providing facilities for licensing and fiscal incentives.

"For example, the newest incentive is super tax deduction. This step is to increase investment in terms of creating innovation and strengthening the competence of industrial human resources, "he said.

In fact, in order to protect the domestic automotive industry, especially commercial vehicle manufacturers, the Minister of Industry emphasized that his party would not grant permits to import used trucks into the domestic market.

"This protection is provided to increase the utilization of our industry. So, I make sure that the import does not happen, unless it cannot be produced domestically, "he said.

The Minister of Industry added that his ministry is determined to encourage commercial vehicle industry players to boost their competitive and innovative productivity in order to meet consumer demand, from supporting infrastructure development needs, logistics, to entrepreneurship.

"We see that this industry has the capability and its utilization can still be improved. For this reason, there is no need to import used trucks so as not to injure this sector, "he added.

Export Target of 1 Million Units

Furthermore, the Ministry of Industry and the Association of Indonesian Automotive Industries (Gaikindo) will collaborate with each other to sharpen the spurs of the domestic automotive sector. Moreover, the government has set an export target for Indonesian CBU vehicles to reach 1 million units by 2024.

"We continue to coordinate with Gaikindo, including regarding the maintenance of raw material needs amid the impact of COVID-19. On average, the automotive industry still has sufficient raw material reserves. We are also following the information that several industries in China and Japan are starting to return to normal production, ”he explained.