US Import Tariffs Could Flood Indonesia with Chinese Cars

Four-wheeled vehicle brands in Indonesia will face stiff competition, if import tariffs in Indonesia remain low without being complemented by a comprehensive TKDN (Local Content Level) policy.

He emphasized that the government and manufacturers need to cooperate and move quickly to face the potential negative impacts of the US import tariff.

“The government can apply selective tariffs, for example by raising tariffs for completely built-up (imported) vehicles from China,” said Yannes.

Meanwhile, CKD (Completely Knocked Down) components are given relief so that local assembly remains viable and new industries are attracted to invest.

Photo : KatadataOTO

"The government can also require investors to build partnerships with SMEs (Small and Medium Enterprises) with a measurable TKDN percentage within a clear and time-bound target,” said Yannes.

Then, domestic automotive brands need to prepare for local production gradually and take advantage of tax incentive support.

“Government-manufacturer collaboration must focus on export markets in ASEAN, Africa, and the Middle East, not just surviving the Chinese onslaught. So that Indonesia can grow into a production hub, not just be trapped as a mere market,” he asserted.

Photo : Courtesy

For your information, several domestic brands that already have assembly facilities include Toyota, Daihatsu, Honda, and Hyundai.

Chinese brands are also becoming more aggressive; BYD has started the construction process of a factory in Subang, West Java. Meanwhile, brands like GWM and Chery are utilizing the facilities of PT HIM (Handal Indonesia Motor).

These brands can survive with assistance such as government incentives, as well as other policies in response to the implementation of the US import tariff.