Indonesia’s traffic-clogged capital needs a comprehensive mass transit system, not cheaper cars, Jakarta Governor Joko Widodo reiterated in a letter to Vice President Boediono in opposition of a central government plan to boost the sales of low-cost green vehicles.
President Susilo Bambang Yudhoyono inked a plan in May offering tax breaks to drivers purchasing low-emissions vehicles. The policy would reduce the luxury goods tax applied to domestically produced green cars. The tax, which is added to the price of automobiles, can add an additional 70 percent onto the ticket price.
Automaker Astra International has already jumped on the regulation, producing low-emissions Toyota and Daihatsu models for the domestic market. Honda has also released a green vehicle. The vehicles retail between Rp 76 million and Rp 120 million ($6,660 to $10,500).
The central government hopes the tax breaks will boost the nation’s auto market by offering eco-friendly cars to low- and middle-income Indonesians. Some 1.1 million vehicles were sold last year. This year’s numbers are expected to remain flat.
But a surge in car sales is the last thing the chronically congested capital needs, Joko said. The city flirts with near-total gridlock on heavy days and a long-awaited plan to expand Jakarta’s public transit system is still years from completion. The administration purposely held-off proposed inner-city toll road projects out of fear that even more cars would fill the gap. Now this central government regulation threatens to undo what progress the capital’s new leaders have made, the governor said.
“The policy is contrary to Jakarta administration’s efforts to accelerate the management of traffic congestion in the city,” Joko said. “We are currently speeding up the preparation of the facilities and infrastructure to reduce the traffic and then suddenly there is this cheap car policy.”
The governor came under fire last week for his criticism of the plan. But the policy, which has split the city’s administration and has received the support of the central government, is unlikely to change, Joko said.
“It has already become a policy, so what can we do about it?” he said last week.
The central government rolled out a 17-point plan to reduce Jakarta’s traffic in 2010. Joko urged the government to follow through on its previous plan before supporting additional car sales. Government bureaucrats have yet to draft the regulation needed to allow the capital to move forward with a Singapore-style electronic road-pricing system.
“We need the central government’s support to make it come true,” Joko said.
Deputy governor Basuki Tjahaja Purnama said the letter to Boediono was merely a suggestion.
“We voiced our objections to the policy through the letter,” Basuki told the Indonesian news portal Liputan6.com. “The fact is the cheap cars [regulation] can not be withdrawn. The governor has said that we feel slighted.”
A spokesman for the vice president said the Low Cost Green Car regulation did not interfere with the capital’s efforts to reduce traffic.
“We think there is nothing wrong with the LCGC policy,” Yopie Hidayat said. “There are traffic jams, true, that need to be managed with public transportation.”
Some 30,000 low-emissions cars will roll off the assembly line this year, Budi Darmadi, of the Ministry of Industry, told the Indonesian news portal Detik.com. The green cars will account for some three percent of all the vehicles sold in the country. The government plans to increase production by 10 percent next year.
Nearly half of the low-emissions vehicles produced will be sold in the greater Jakarta are, he said.
Industry minister M.S. Hidayat accused Joko of over-reacting in an interview last week.
“Please tell Joko this is intended for the lower- and middle-income people, the people who also love him,” Hidayat said. “He should allow them to have the chance to buy low-cost cars.” The Jakarta Globe