Bisnis Indonesia - Bisnis.com

JAKARTA: Import duty for sedan in incompletely knocked down (IKD) condition will be revoked in order to spur the production and its components industry in the country.

Based on Minister of Finance Regulation No. 88/PMK.011/2010 on Stipulation of Goods Classification System and Import Duty Imposition for Imported Goods (Third Amendment of Ministrial Regulation No. 110/2006), IKD import duty for sedan is still 7.5%.

Deputy IV for the Coordination of Industry and Trade of Ministry of Economic Edy Putra Irawady said during recent years, sedan production in domestic assembly industry continues to decline.

Amid automobile production and sales growth, Indonesian Automotive Industry Association (Gaikindo) also noted sedan production and sales continues to decline.

Sedan production during January – April 2012 period dropped 82.45% from 1510 units in the same period in 2011 to 265 units. Year-on-year sales declined 27.57% from 9700 units to 7026 units.

The decline in production was triggered by high import duty for IKD. In the regulation, sedans up to 1,500 cc cylinders capacity imposed by 7.5% import duty.

Edy said some efforts are being taken by the government such as proposed to revoke IKD import duty for sedan, while the completely knock down (CKD) remains 10%.

With the import duty removal, the sedan production in the country that utilize supporting components products from local companies are expected to be improved. "The Government wants local components are utilized as much as possible," he said. (T07/msw)