Govt to scrap duty on IKD components for sedans
Kamis, 24 Mei 2012 | 14:58
The government is planning to scrap duty on the import of incompletely knocked down (IKD) components for the production of sedans this year to boost the domestic sedan and component industry.Under the finance minister`s regulation number 88/PMK.011/2010, duty on the import of IKD components for the manufacture of sedans is set at 7.5 percent, the deputy for industry and trade coordination to the coordinating minister for economic affairs, Edy Putra Irawady, said here on Wednesday.
According to him, sedan production from the domestic assembling industry continued to decline in the past few years.
"The government is making a number of efforts (to boost the sedan production) by, among other things, proposing the abolition of duty on the import of IKD components, while at the same time maintaining duty on the import of CKD (completely knocked down) components at 10 percent. The decision to scrap duty on IKD components is in the hand of the finance ministry," he said.
By doing so, the production of domestic sedans using local components could be increased, he said.
"The government wants the production of domestic sedans to use as many local contents as possible," he said.
The domestic sedan production in January-April 2012 plunged 82.45 percent to 265 units from 1,510 units in the same period last year, with sale volumes plummeting 27.57 percent year-on-year to 7,026 units from 9,700 units.
The high duty on the import of IKD components was responsible for the drop in the sedan production. (*)