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Eased rules to boost car exports
The government has made it easier for carmakers to ship their products abroad by simplifying export procedures for completely built-up (CBU) cars in an apparent move to plug Indonesia’s trade deficit
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The government has made it easier for carmakers to ship their products abroad by simplifying export procedures for completely built-up (CBU) cars in an apparent move to plug Indonesia’s trade deficit.
The newly issued Customs and Excise Director General’s Regulation No. 1/2019 relaxes administrative requirements for exporters in the automotive sector, which is considered one of the country’s industrial pillars.
The measure was a “quick fix” intended to boost exports and improve Indonesia’s trade balance, said Coordinating Economic Minister Darmin Nasution in Jakarta recently.
Separately, Finance Minister Sri Mulyani Indrawati said the new regulation, which took effect in early February, would cut costs for car producers, which previously had to store their products in warehouses near ports while waiting to complete their export manifests. The old procedure was considered cumbersome and time-consuming.
“Now, the export notification documents can be handed over [to the customs authority] after the goods enter the customs areas,” said Sri Mulyani in Jakarta recently, adding that the documentation could be submitted to the authorities up to three days after the departure date of the goods.
The new procedure could be implemented well, as the customs and excise office had integrated its data with port operators and carmakers, she added.
Industry Minister Airlangga Hartarto lauded the regulation, saying it would boost automotive sector exports by improving the competitiveness of local producers.
“We welcome the [relaxed] regulation, and it is very meaningful for an industry [in international competition],” said Airlangga.
Indonesia exported 264,553 CBU cars in 2018, up 14.4 percent year-on-year (yoy), data from the Association of Indonesian Automotive Manufacturers (Gaikindo) show.
Overall automotive industry exports, which includes exports of completely knocked down (CKD) cars and car components, had yielded US$6.6 billion in foreign exchange earnings in the same year, Airlangga said.
He added that, with the help of the regulation, the Industry Ministry aimed to increase automotive industry exports to 400,000 cars in 2019.
According to an estimate made by PT Astra Daihatsu Motor, the local subsidiary of Japanese automotive giant Daihatsu Motor Company, the new regulation will improve logistics efficiency, as manufacturers’ stockpiles will decrease by 36 percent.
Transportation and logistics costs would come down by an estimated 19 and 10 percent, respectively.
Indonesia is in dire need of reducing its trade deficit, which amounted to $8.57 billion in 2018, the highest figure since 1975, as imports jumped 28.5 percent yoy, while exports only grew 15 percent yoy.
Meanwhile, the Association of Priority Lane Companies (APJP) estimated that the new regulation would save Rp 750,000 ($53.45) per car thanks to lower transportation and logistics costs.
APJP adviser Edward Otto Kanter said the new regulation would cut the long process of logistics delivery to the customs zone, as manufacturers did not need to build inventory stocks outside of the customs zone. The previous process, in which exporters also took into account last-minute adjustments of orders from overseas customers, could take up to one week, he said.
IT integration, he said, would also ensure the consistency of data between authorities and exporters.
Airlangga said the impending signing of the Indonesia Australia Comprehensive Economic Partnership Agreement (IA-CEPA) would also widen market access for the country’s automotive industry to the neighbor down under, helping to boost car exports.
Airlangga said the government would continue to look for ways to boost exports of prioritized sectors under the Making Indonesia 4.0 — an industrial road map issued by President Joko “Jokowi” Widodo last year to harness the opportunities of the so-called Fourth Industrial Revolution.
Under the road map, the automotive, electronics, food and beverage, textile, and chemical industries are prioritized because of their competitive advantage.
