At the Indonesian show, held from July 24 to August 2, Finance Minister Sri Mulyani Indrawati said the government plans to introduce favorable investment regulations and import tariffs in the service of getting "environmentally friendly technologies and biofuels" going in the country.
The Indonesian industry ministry's director general, Budi Darmadi, has since elaborated on this statement, saying the government plans to offer incentives for the production of low-cost, eco-friendly cars starting in 2012. He said "the incentives are still being discussed" and that the government still has to decide on the specific technologies it intends to promote and the related cost criteria.
It is thought that incentives will be offered to promote the production and sale of hybrid and electric vehicles, as well as small energy-efficient vehicles and the use of biofuels such as diesel blends. Indonesia has the largest market in Southeast Asia for small and medium-sized MPVs and has the potential to become an important export base for alternative-fuels models.
Toyota staged the Indonesia launch of the Prius hybrid at the auto show. Its sales are expected to be limited despite its prospect of fuel savings, though, as it will be priced at the equivalent of $59,000 here, more than twice the cost of an equivalent model with a conventional drivetrain.
PT Toyota Motor Astra Marketing Director Joko Trisanyoto said he has long lobbied the government for incentives to promote the sale of eco-friendly vehicles. Key executives in the industry also maintain that the high cost of hybrid technology is the main reason they have not launched such models in Indonesia so far.
Inside Line says: If the alternative is a nearly $60,000 price tag for a Prius, the government would do well to come up with some incentives to give alternative-fueled vehicles a chance at success in Indonesia. — Tony Pugliese, Correspondent
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