Apindo: auto industry to cut production by 50 percent

Indonesia's automotive producers are expected to cut their production volumes by up to 50 percent this year due to a slump in demand, and expect to have massive lay off to follow.

"Our estimation is that the auto industry will cut its production by between 30 to 50 percent, including motorcycles," said Indonesian Employer's Association chairman Sofyan Wanandi in Jakarta on Thursday.

A sluggish demand also occurred in the property sector, Sofyan said, with about two million unit of houses unsold so far.

"Clearly Indonesia's business climate has become harder. People just don't dare to shop anymore," he said.

Sofyan said businessmen expect the government to immediately give financial stimulus and disburse its annual budget particularly those allocated for the infrastructure projects with a total worth of Rp 10.2 trillion (US$867 million).

Government expenditures on infrastructure projects, he said, could help the economy afloat in times of global crisis, which had severely affect demand for Indonesian products.

"However, this plan will take some time to implement because unclear regulations. The local governments are often not helpful. The stimulus plans haven't even been approved by the lawmakers," he said.

Business players, he said, were in a dilemmatic condition because of the uncertainties.

"Firing workers, cutting production, cutting raw materials, refraining from borrowing money, all are being done to maintain the cash flow," he said while adding that the impact from the global financial crisis likely to be felt in the next two years. (and)