Gaikindo fears moratorium on new car production to cause disinvestment

Jakarta (Antara News) - If the government really implements a minister`s plan to impose a moratorium on production of new cars, many companies, especially in the automotive sector, will disinvest, an industry spokesman said.

"If the idea of a moratorium as raised by the environment minister is really carried out, investment in the automotive sector which the government wants to promote further, will certainly be disrupted," Bambang Trisulo, chairman of the Federation of Automotive Industries (Gaikindo), said here Monday.

Environment Minister Rachmat Witoelar recently said he was planning to issue a decision imposing a moratorium of production of new cars in view of worsening air pollution in big cities in the country.

Bambang said a moratorium would certainly dampen the interest of world automotive producers in building assembly plants in Indonesia.

"If the environment minister really has that intention, it will reflect disunity in the United Indonesia Cabinet because on the one hand the government wants to invite investment in the sector but on the other it is also limiting investment. The environment minister`s policy should be synchronized with the other ministers` policies," he said.

Bambang noted that the industry ministry was determined to make the country a base of world car production.

Bambang said a moratorium on new car production was not necessary because the gas emission of new cars were already meeting Euro II environment-friendly standards.

He said, in hiw view, what the government should do, instead, was limit the age of cars that people could take out into the streets.

"The government must see what has actually increased the air pollution level in the streets. Pollution may rise if traffic jams occur very often or fuel used for the cars is below standard of gas emissions," he said.

Bambang hoped the government would reconsider its plan because it would cause stagnation in investment in the sector which will be made one of the country`s leading industries in the long term.

In 2006, the country`s car production reached 289,370 units and in it was expected to go up 325,252 in 2007.

Car sales in the country in 2006 reached around 310,000 units and they are expected to rise 15 to 20 percent this year.

Production of motorcycles in the country meanwhile was expected to rise from 4,434,967 units in 2006 to 4,984,903 this year.(*)
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