Following the news from the Association of Indonesia Automotive Industries (GAIKINDO) that automotive exports from the country declined by 30.1%;

Bakar Sadik Agwan, Senior Automotive Consulting Analyst at GlobalData, a leading research and consulting company, offers his view:

“Indonesia’s automotive output tumbled significantly due to the COVID-19 and troubled economic environment in 2020. Production, domestic sales, exports and imports all were significantly below the initial expected levels. Indonesia, which is the second largest vehicle manufacturer in the Southeast Asia, depends heavily on exports, making it a key variable for the domestic automotive economy.

“Complete built-up (CBU), complete knocked-down (CKD) and vehicle as component exports witnessed steep decline of 30.1%, 60.1% and 22.9%, respectively, in 2020 due to weak overseas demand. With the decline, Indonesia has lost track on its target of exporting one million vehicles by 2024. The present export volume i.e., 2020 stands at 232,175 CBU units compared to 332,023 units in 2019 and looks quite far away from the announced government target.

“The government or the local manufacturers have limited control on the overseas demand flows and not just Indonesia, but Thailand and Malaysia also witnessed decline in exports. The government through stimulus measures such as subsidized car loans and temporary waiver of tax is trying to shore up the domestic demand, and subsequently, the production afloat but that is insufficient to counterbalance the export dent.

“Indonesia should bring in new investments into automotive production and offer attractive incentives to expand capacities of the existing players. The government has already made major announcement regarding domestic EV production. GlobalData expects situation to be slightly better in 2021 with stabilizing overseas demand and OEMs better using their capacities when compared to 2020. GlobalData forecasts Indonesia’s light vehicle production to be 972,000 units in 2021.”