W

hen Surakarta Mayor Joko “Jokowi” Widodo conveyed his intention to replace his official vehicle, a Toyota Camry, with a vocational student-made Kiat Esemka, he could not possibly have imagined he would create such a hit across the nation.

The sports utility vehicle Kiat Esemka — which stands for Kiat Motor workshop and vocational school (SMK) — assembled by students of state-run SMK 2 Surakarta, seems to have not only stimulated talks of developing a “national car”, but has also prompted the public to look at similar locally-manufactured cars, which so far have never come to center stage.

Take a look at Gea (a girl’s name in Indonesian), made by state-owned train manufacturer PT Industri Kereta Api (Inka); Tawon (meaning “bee”), produced by Banten-based PT Super Gasindo Jaya; or Fin Komodo, made by West Java-based PT Fin Tetra Indonesia, as examples.

The Gea, whose 650 cc machine is developed by the Assessment and Application of Technology Agency (BPPT), is a city car that can run up to 85 kilometers per hour and is sold at between RP 45 million and Rp 50 million each.

Using a machine with a capacity similar to the Gea, the Tawon is set to run up to 100 kilometers per hour on gasoline or gas fuel (CNG) and is sold at Rp 48 million per unit.

Unlike the Gea and the Tawon, the Fin Komodo, equipped with a 180 cc engine, is an off-road car designed to run in various locations, including forests, and can run up to 100 kilometers per hour and functions as a utility car with the
capacity carry goods weighing up to 250 kilograms.

Indonesian Automotive Industry Association (Asia Nusa) chairman Ibnu Susilo said that it was the right time for Indonesia’s automotive industry to go beyond having more than 80 percent of local content and start developing locally-branded cars.

“National vehicles”, he said, should be ones owned by Indonesian firms, designed by local engineers and, thus, patented on behalf of Indonesians.

“If we can stick to this definition, we can build our own automotive industry and can be sole-authorized agents all over the world,” he told The Jakarta Post.

Ibnu, who is the architect of the Fin Komodo, and once the aircraft designer of the CN-250 Gatotkaca airplane and Maleo car prepared under former president BJ Habibie, said that by creating locally-branded products, local manufacturers would be able to stimulate the growth of its supporting industry at home by using locally-made materials, thus bringing higher multiplier effects to the economy. He cited the Fin Komodo, which used steel made by state-owned steel firm PT Krakatau Steel, while other foreign manufacturers required imported steel.

“Technology is culture. We are trying to build the industry with formulas oriented toward our local-supporting industry. The supporting industry can grow because of the culture we build,” he said.

Indonesian Automotive Industry Association (Gaikindo) deputy chairman Jongkie D. Sugiarto said that while building local brands would not be easy and would require high investment, particularly for research and development, the local industry had several alternatives, including teaming up with foreign automakers to create national brands.

“We should not be shy to buy the technology from foreign firms. We can redesign and redevelop, create our own brands and use local content as much as possible and after reaching an economy of scale, we can stop importation and become independent,” he said, citing the experience of Hyundai that cooperated with Mitsubishi to build the South Korean automotive industry.

In a similar move, neighboring country Malaysia created its local brand, Proton. Set up in 1983, the government-linked company Proton cooperated with Mitsubishi Motors to develop its own car with Malaysia, at first only creating the brand and handling the management.

Later, upon finding technology transfer was more difficult than expected, Proton teamed up with car manufacturer Lotus in 1996. Mitsubishi finally released its shares in Proton in 2004.

Former Malaysian prime minister Mahathir Mohammad acknowledged that the government support, including protecting the domestic market, was essential to building a local car industry.

Unlike Malaysia’s Proton cars, none of the so-called national cars have entered the market.

The Industry Ministry’s high technology priority industries director general, Budi Darmadi, on the other hand, said that Indonesia’s automotive industry had surpassed the “buying technology” stage as it already exported its product to more than 60 countries.

“Our target is to become ASEAN’s production base of any cars without limiting the brands,” he said, adding that by doing it that way, investment would come, absorb the labor force, and thus drive the country’s economy.

“The government has supported local brands in promotion, testing, research and development, and finding investors, as it will take huge investment of around Rp 2 trillion to build an automotive industry,” he explained.

The Industry Minister MS Hidayat, however, said his ministry was supportive of the birth of the so-called ‘national vehicles’, but the criteria should be clear and the goal must be achieved through sensible steps.

“If all people want to have “national vehicles”, we can begin, but we need to be realistic about which size segment we want so that they can thrive. I suggest that local brands can enter the segment that sole-authorized agents are not in, for example the 700 cc category, and later they can gradually climb up to a higher size segment,” he said.

Asserting that the government would not provide any special treatment, Hidayat said that it might buy locally-branded cars as part of government procurement.

Under the road map up to 2025 , designed by the Industry Ministry, automakers operating in Indonesia are expected to produce multi-purpose vehicles, light commercial trucks and green cars, as well as wide-ranging components, including machines, transmissions and components for the vehicles.

In 2015, manufacturers are expected to make commercial trucks with 24-ton loading capacity, while in 2020 and 2025 they are slated to produce hybrid cars and luxury cars, respectively.

In fact, the government has long endorsed local manufacturers to produce vehicles, starting in the 1970s. Among its efforts were to offer incentives to PT Astra International to collaborate with Japan’s largest automaker Toyota Motor Corporation to initiate its own brand. Nevertheless, Astra has yet to go further beyond assembling and distributing Japanese-branded cars, especially Toyota.

Under the regime of former president Soeharto, the government launched a national car program to follow Malaysia’s government Proton plan with which PT Timor Putra Nasional, owned by Soeharto’s son Hutomo “Tommy” Mandala Putra, was granted the privilege of covering luxury taxes and import tariff exemptions.

The policy became so strong that it drew opposition from international manufacturers, including from Japan, Europe and the United States, who later brought the case to the World Trade Organization (WTO).

The company, in partnership with South Korean company KIA Motor, produced thousands of 1,500 cc sedans under the Timor brand, which was rebranded to KIA Sephia. However, the project halted following the fall of Soeharto in 1998.

Automotive observer Suhari Sargo said that Indonesia’s huge domestic market would be a particular advantage for the local firms to develop its own brands. Gaikindo earlier this year estimated that Indonesia’s car sales can hit 940,000 units this year.

“This is just the right moment to build a local industry. There is such a spirit to start loving locally-made products,” he said, citing the intervention from the government would be necessary to provide a conducive climate, thus accelerating the proliferation of local brands, including taking part in investment through state-owned firms.