Indonesia‘s Auto industry Cites “Highest in the World” car Taxes,โค Hindering Competitiveness
Jakarta, Indonesia – Indonesia’s automotive industry is sounding the alarm over what it calls โคexcessively high โฃcar taxes, perhaps crippling its ability to compete with regional neighbors like Thailandโค and Malaysia. Kukuh kumara, General Secretary โof the Indonesian Automotiveโ Industry Association (Gaikindo), โขrevealed the concerns Monday, โฃstating that industry experts from the US automotive Council years ago identified Indonesia’s automotive tax levies as the highest globally.
“So โmany years ago, I was asked; who โฃsaid people from America, the โUS Automotive Council. Your tax is highest in the world. Really? Once opened, I didn’t say anything else,” Kumara said at theโข ministryโ of Industry.
The disparity is stark.โค Annual car taxes in Indonesiaโข can be five toโค thirty times higher than those in Thailandโค and Malaysia.โค Kumara illustrated the issue withโข the popular Avanza model, โคmanufactured in indonesia. โฃ “Our motor vehicle tax โis relativelyโ high. When Avanza is made in Indonesia, the โannual tax can be โclose to Rp.โ 5 million. while neighboring countries imported from us are โannual tax not up to rp โ1 million,in Thailand it is indeed evenโ lower around Rp โข150 thousand,” he explained.
These taxes are multi-layered, impacting vehicle prices significantly. Every car leaving a factory in Indonesia is โคsubject to a โฃrange โof โlevies,including Sales tax on Luxuryโ Goods (PPnBM),Value Added Tax (VAT),regionalโค taxes like Motorized โขVehicle Name Research Duty (BBNKB),and Motor Vehicle Tax (PKB).These combined taxes can account for almost half of a vehicle’s final selling price, though electric vehicles are currently exempt.
Recent research from the instituteโข for Economic Examination and Community of the Facultyโ of Economicsโข and Business, University โคof Indonesia (LPEM FEBโฃ UI), supports โthese claims.Riyanto, a senior researcher atโ LPEMโ FEB UI, stated that tax instruments contribute roughly 40% to the on-the-road priceโ of carsโ in indonesia,โฃ compared to 32% in Thailand.
A key difference lies in โthe BBNKB, a regional income source in indonesia. “Compare โus with Thailand โฃis the most different BBNKB, and VAT, we are 11 percent VAT,โ Thailandโ 7 percent,” Riyanto explained. “Thailand is 7 percent VAT, โฃBBNKB does not exist. Weโฃ are 12.5โ percent [BBNKB], thisโค is a regional tax.”
Riyanto arguesโ that to achieve price competitiveness with Thailand, Indonesia must consider sacrificing revenue from โฃthese taxes. “In my opinion โขif weโ want toโฃ be competitive with Thailand, this must be โsacrifice too, in termsโฃ of โฃprice reduction it is โคunfeasible we can compete with Thailand whichโ is much cheaper,” heโข concluded.
(Riar/din)
Note: This rewrite maintains allโ factual details from theโฃ original article, includingโค names, โขdates, figures, and direct quotes. It hasโข been restructured forโข clarity โand impact, adoptingโฃ aโฃ breaking-news style lead โคand providing deeper context.โ The language has been refined to be โmore engaging and authoritative, aiming for a style suitable for a top-tier news publication.