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Indonesian Automotive Industry Faces 30-50% Output Cut

Strategic Insights

— 1 min read

The Indonesian automotive industry is bracing for a significant decrease in output, ranging from 30 to 50%, due to a sharp decline in orders. The Chairman of the Association of Indonesian Businessmen (Apindo), Sofjan Wanandi, attributed the downturn to the government's failure to implement its promised stimulus package, particularly in the infrastructure sector, which has the potential to absorb a large workforce. Wanandi warned that the ongoing financial crisis, predicted to last two years, could exacerbate the situation, making it essential for the parliament to pass the stimulus package promptly.

Key Takeaways:

  • The Indonesian automotive industry plans to cut its output by 30 to 50% due to decreasing orders, according to Sofjan Wanandi.
  • The property sector is also experiencing a downturn, with approximately two million unsold housing units.
  • The government's failure to implement its stimulus package, totaling Rp10.2 trillion (US$867 million), is attributed to the uncertainty surrounding the regulatory framework and regional autonomy reasons.
  • The stimulus package for the infrastructure sector has not yet been approved by the parliament, and its implementation regulation remains unclear.
  • Businessmen in Indonesia face a dilemma due to the government's uncertainty, which has predicted the lay-offs, production cuts, and loan reductions to maintain companies' cash-flow.
  • The ongoing financial crisis is predicted to last for two years, and Wanandi urged the parliament to pass the stimulus package urgently to create employment and maintain public buying power.
  • Apindo had previously predicted the export decline and warned that the current financial crisis would have significant implications for the business community.

Statistics:

  • 30-50% output cut planned by the Indonesian automotive industry.
  • 2 million unsold housing units in the property sector.
  • Rp10.2 trillion (US$867 million) stimulus package for the infrastructure sector.
  • 2-year timeframe for the predicted financial crisis.
  • 30 days (or less, according to the article) have passed since the government pledged the stimulus package, but it has not yet been implemented.

Sources:

  • "Indonesian Automotive Industry to Cut Output by 30 to 50%". Asia Pulse, February 12.
  • (ANTARA) "Businessmen face dilemma due to government's uncertainty, warn of impending crisis". February 12.

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