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Jakarta, CNBC Indonesia – The speech to reduce taxes on new car purchases to zero percent has become a hot topic this week. The public seems excited about the policy, expecting car prices to drop and be much cheaper than the current price.
This speech was originally delivered by the Minister of Industry (Menperin) Agus Gumiwang. He admitted that he had requested the relaxation of a 0% tax on the purchase of a new car.
This effort is expected to stimulate the automotive market and at the same time stimulate the growth of the automotive sector amid the Covid-19 pandemic.
“We have proposed to the Minister of Finance to relax the 0% tax on new cars until December 2020,” Agus said earlier this week, on Monday (9/14).
He had presented this suggestion since last week, specifically during the meeting of the National Chamber of Commerce on Thursday (9/10). The goal is to speed up recovery.
“We understand that the auto industry has many derivatives. Level 1 and level 2 are many, so you have to pay attention to it so that people’s purchasing power can increase. Tax relaxation can be applied so that it can help growth of the manufacturing industry in the automotive sector, “he said.
The president of the Indonesian Automotive Industries Association (Gaikindo), Yohannes Nangoi, responded enthusiastically to the speech. According to him, this incentive will have a broad impact on the auto industry and will drive down car prices and make people’s purchasing power improve again.
“For example, for the PKB (motor vehicle tax) and the transfer fee for motor vehicle names (BBNKB). For example, the (Toyota) Avanza can drop from 15 to 20 million rupees depending on the model , not bad, “he told CNBC Indonesia on Tuesday (9/15).
The drop in prices is if the government doesn’t collect taxes. It can be seen from the price of the road that it is more expensive because it includes tax costs, while the price of the road does not include the payment of taxes. Yohannes hopes that later the off-the-road price will be an official price that can now go out on the street.
“So we talked to the Ministry of Industry. There are two things, first we ask PPNBM for a tax break on luxury goods for taxes produced in Indonesia. Second, we also want prices to be relaxed on the roads. PKB , transfer fees can help the government. Direction to the Interior Ministry. PPnBM to the Ministry of Finance is coordinated by the Ministry of Industry under the minister directly, “he said.
However, Yohannes reminded him that this plan was still under discussion. Communication with the government continues, both central and local government. He hopes that this relaxation can be provided until the first quarter of 2021
“In Indonesia, how is it that the market is very slow, while the auto industry has to endure to avoid layoffs, the company is closed. They put friends in Gaikindo saying that if we can support the government, we don’t want to burden the government too much, so For example, we ask for help to give money, no, “he said.
This fiscal relaxation is divided into elements. For local governments, namely PKB and BBNKB, while for central government, it is the value added tax (PPN) and the luxury goods sales tax (PPnBM).
The general secretary of the Indonesian Automotive Industry Association (Gaikindo), Kukuh Kumara, believes that the impact will have an effect on increasing sales. However, he still couldn’t estimate how much the increase would be if he bought a new car at 0% tax. By way of illustration, the value of BBNKB only reaches 12.5% of the vehicle’s sales value, not yet PPnBM, which can reach 10% for certain vehicles.
“On average, most of our people buy motor vehicles at prices below Rs 300 crore. If the discount, downsizing and relaxation increases, they will flock. Also, public transportation is limited,” Kukuh told CNBC Indonesia , on Wednesday (16/9).
The hope is that if this is done, sales will increase, the growth of which has slowed from easing to the PSBB implementation phase, especially in DKI Jakarta.
Car sales in August were recorded at 37,277 units. It is still far from the normal time where average sales per month reached 80-90 thousand units. It can be seen from the above data, that annually, August sales of this year still fell 58% from August 2019 which had penetrated 90,568 units.
It also revealed that many auto derivatives industries are waiting for this policy to pass, because the effect is so great.
“The big auto companies have a lot of wagons. From tier 1, tier 2 and tier 3 to MSMEs. Thousands of suppliers, including other services, aftermarket shops are moving again. This must be maintained,” he said.
To safeguard this, in addition to communicating with the central government, cover letters for tax reduction have also been delivered to various regions. This is because local governments collect Motor Vehicle Tax (PKB) and Motor Vehicle Name Transfer (BBNKB). Kukuh said that there were four provinces that had given positive signals.
“Those who responded positively were, for example, West Java, then Yogyakarta, South Sumatra and Central Kalimantan. They did so even though it was not what we expected,” he said.
