Fuel Price will not Affect Automotive Industry, Association Says

TEMPO.CO, Jakarta - The plan to increase fuel prices by the new government will not affect the automotive industry significantly. The fuel price increase will only cause a temporary slowdown or even no slowdown at all.

"Typically there will be a slowdown for about two months, depending on the increase," said Noegardjito, Secretary General of Indonesia's Automotive Industry Association (GAIKINDO), after the opening of the Surabaya Auto Show 2014 on Wednesday, October 29, 2014.

He looked back to the previous experience of fuel price increase in 2005 and 2006. The increase, which happened twice, on March 1 and October 1, caused domestic automobile sales to drop by 39 percent.

If President Joko Widodo's government decided to increase fuel price immediately, the drop in sales could happen again. "But it will not take long to adjust, because the people will only be shocked by it temporarily," said Noegardjito.

He hoped that the government would provide certainty so that the automotive industry can remain conducive. Based on GAIKINDO's data, automobile sales in Indonesia are projected to reach 1.25 million units until the end of 2014, which is higher compared to last year's number of 1.22 million units.

ARTIKA RACHMI FARMITA