THE INDONESIAN MARKET FOR BUSSES

The Indonesian automotive market is divided into two main categories, e.g. commercial cars and passenger cars or sedan. In the commercial car category, busses and trucks are grouped into category II for light trucks and busses (for gross vehicle weight of 5-10 tons) and category III for trucks and busses (for gross vehicle weight of 10-24 tons). The Indonesian automotive industry, after 3 decades since its beginning in the early 70’s, is still a typical assembling industry rather than a full manufacturing activity; for trucks and busses, chassis and motor are still imported, whereas the body and other automotive parts and components are already domestically manufactured. The government deregulated the automotive industry completely in June, 1999 and opened-up the domestic market among others also for direct imports of built-up cars for all types and classes. In the case of busses, however, the vehicles are up till now still assembled domestically and none has so far, for obvious reasons, been imported in completely built-up condition.

The market in Indonesia for trucks/busses is dominated by two makes, e.g. Japan and Germany. Japan is represented with brands such as Hino, Mitsubishi, Nissan and Germany has Mercedes Benz; the dominant players are Mitsubishi and Mercedes Benz in the light truck/bus category II and Hino and Mercedes Benz in the truck/bus category III.

It is quite obvious from the above numbers that the market for such commercial vehicles is yet to grow and develop; a total market share of only 13.6% for such commercial cars of category II and III still allows room for growth and expansion and considering the market potential in Indonesia with 210 million people, the 4th largest most populous country in the world, and scattered in over more than 13.000 islands, land transportation is somewhat crucial and essential to the population. Not only the expected economic recovery but also the necessary replacement and revitalization of existing and already ageing fleets of busses being the major means of land transportation vehicle will consequently create a growing demand for busses in not too distant future.

Currently, Indonesia does not provide any preferential tariff for the importation of automotive products in general; the import tariff structures in general, follow and adopt the rules generally applied by the World Trade Organization (WTO) and as a general rule, the following tariff structure may be applicable:

- Import Duty: percentages of import duty may vary between 0% and 40% depending on the types or kinds of goods imported
- Sales Tax/VAT: either 0% or 10%
- Sales Tax on Luxury Goods: either 10% or 30% depending on the types or kinds of goods imported.