Jakarta (VNA) – Indonesian President Joko Widodo has agreed to extend luxury tax exemption on low-cost cars until the end of this quarter, Coordinating Minister for Economic Affairs Airlangga Hartarto has said.

Cars with a selling price below 200 million Rp (about 14,000 USD) are exempt from the 3 percent luxury tax for the next three months, Airlangga was quoted as saying by Antara news agency on January 17. The luxury will be adjusted to 1 percent in the second quarter, 2 percent in the third and 3 percent in the fourth quarter, he added.

Meanwhile, the 15 percent luxury tax on cars within the price range of 200 million rupiahs to 250 million Rp is reduced by half in the first quarter of the year.

The Indonesian government has introduced vehicle luxury tax exemption since early last year to keep the domestic automotive industry afloat amid the devastating economic impact of the Covid-19 pandemic. The national car sale volume surged by 66.7 percent to 887,202 units last year thanks to the massive tax incentive, though it remains below the pre-pandemic level of over 1 million units.

According to Jongkie Sugiarto, Chairman of the Indonesian Automotive Manufacturers Association (Gaikindo), the government’s stimulus in the form of luxury tax exemption has been very helpful in boosting sales and production volume./.