Minister: Automotive Sector will Become Indonesia's Main Sector  

TEMPO.CO, Jakarta - Minister of Trade Muhammad Lutfi, said that the automotive industry has become one of the primary business sector of in Indonesia, which is why global automotive companies operating in Indonesia are required to join up with local businesses to provide a level and even growth of the industry. "Particularly for small medium enterprises," he said yesterday at the opening ceremony of the 22nd Indonesia International Motor Show 2014.

Lutfi said that this is not an urgent issue because the automotive industry is still currently dominated by foreign automotive companies. He also said that foreign carmakers are required to use domestic materials for their Tier 2 or Tier 3 components. "The brand may be Japanese, but the components used are local components," he said.

This year, a number of car makers have invested a large sum of money to expand their business, including Toyota, Daihatsu and Mitsubishi, which has doubled their production capacity.

With this achievement, Lutfi is certain that in the next five years, automotive products will be a very popular sector of export after palm oil and shoes. Considering this trend, Lutfi said that the good investment climate must be maintained as well as close cooperation with local producers as the supporting industry.

Indonesia's Joint Automotive Industry Association (Gaikindo) recorded that the number of car production from January 2014 to August 2014, which reached up to 878,546 units, was 13.84 percent compared to the same period last year. From the total units produced, 48.3 percent are passenger cars with an engine capacity below 1.500 cc. Low Cost Green Cars (LCGC) come in second place with a share of 14.8 percent

FERY FIRMANSYAH | YOLANDA RYAN ARMINDYA | HUSSEIN ABRI YUSUF