Indonesia

Last modification: 1 Oct 18

Chapter 1: Economic and business environment

Demographics

2.57.563.820
Capital

Jakarta
Major cities

Surabaya , Medan, Bandung, Bekasi, Palembang, Tangerang, Makassar
Languages

Indonesian (id), English (en), Dutch (nl), Javanese (jv)
GDP

3,346.49 USD (2015)
Unemployment rate

5.7% (2015)
Main industries

GDP Composition by Sector:
- Agriculture (16.5 percent)
- Industry (46.4 percent)
- Services (37.1 percent)

Industrial Production Growth Rate: 3.6 percent

Industries:
Petroleum and natural gas, textiles, apparel, footwear, mining, cement, chemical fertilizers, plywood, rubber, food, tourism
Currency

IDR Indonesian rupiah
Interest rate

6,5%
Inflation

4.33% (2017)

Chapter 2 : Automotive market, segments & sales

Total Car park

68 cars per 1000 inhabitants
New vehicle registrations (Cars, LCV, Trucks)

New Car Sales 2015 : 1,277,059
Model preference top 5 (total market)

1.Toyota Avanza,
2.Toyota Agiya
3. Honda Mobilio
4. Kijang Innova
5. Daihatsu Eye
6. Honda HRV
Dealer network (including fleet dealer network)

Good dealer network in the major cities (Jakarta, Surabaya, Medan, Bandung, Palembang, Makasar), coverage decreases in function of the size and industry on the other islands

Chapter 3: Company car market

Top 5 fleet brands (fleet market)

1. Toyota

2. Honda

3. Kia/Hyundai
Fleet Model preference top 5 (fleet market)

1. Toyota Avanza

2. Toyota Innova

3. Honda CRV

Chapter 4: Taxation & legislation

There are two car taxes:
 
Vehicle registration tax (also known as transfer of title tax)
Annual vehicle ownership tax
These two taxes are not to be confused with VAT which is separate.
 
Vehicle registration tax / Transfer of title tax
Vehicle registration, or transfer of title tax (Bea Balik Nama) is a one-time tax and costs 10 percent of the sales price of the vehicle. In Jakarta, however, this tax can be up to 20 percent.
 
To transfer a car's title, Indonesians must show their national identity card (KTP), and foreigners their passport and residence visa (either KITAS visa or KITAP visa). After a change of ownership is processed, the owner is issued a title in their own name (Buku Pemilik Kendaraan Bermotor).
 
Along with the title, the owner is issued a Vehicle Registration Number (Surat Tanda Nomor Kendaraan). An annual fee is paid to re-register the number.
 
Annual vehicle ownership tax
The annual vehicle ownership tax (Pajak Kendaraan Bermotor) is about two percent of the vehicle's assessed value.
 
In Jakarta, people who own a second car are also subject to a progressive tax in a government bid to reduce the number of cars on the roads. The tax on a second vehicle is up to ten percent of its assessed value per year: the exact rate depends on the car's value.
 
Passenger vehicles with engines of more than four cylinders, as well as vehicles that weigh more than 1,500 Kg - for example SUVs - incur an additional surcharge.
 
Value Added Tax on cars
The sale of a car, or a transfer of car ownership is subject to VAT, as of June 2011 it is ten percent of the selling price.
 
Road insurance
The Indonesian government has a road insurance fund which includes life insurance for traffic accidents. The annual fee is called the Compulsory Contribution Fund for Traffic Accidents or Sumbangan Wajib Dana Kecelakaan Lalu Lintas Jalan.
 
As of June 2011, the fee is approximately Rp150,000 a year.
 
Tax rate Occupants Gasoline/Diesel Displacement 4x2/4x4 Vehicle types
10% 10-15 Gasoline/Diesel - - -
Less than 10 Gasoline/Diesel Less than 1500cc 4×2 Excluding sedans and station wagons
20% Less than 10 Gasoline/Diesel Over 1500cc and less than 2500cc 4×2 Excluding sedans and station wagons
More than 3 Gasoline/Diesel - 4×2/4×4 Double cabin, less than 5 tons
30% - Gasoline/Diesel Less than 1500cc - Sedans and station wagons
- Gasoline/Diesel Less than 1500cc 4×4 Excluding sedans and station wagons
40% Less than 10 Gasoline Over 2500cc and less than 3000cc 4×2 Excluding sedans and station wagons
Less than 10 Gasoline Over 1500cc and less than 3000cc - Sedans and station wagons
Less than 10 Gasoline Over 1500cc and less than 3000cc 4×4 Excluding sedans and station wagons
Less than 10 Diesel Over 1500cc and less than 2500cc - Sedans and station wagons
Less than 10 Diesel Over 1500cc and less than 2500cc 4×4 Excluding sedans and station wagons
125% Less than 10 Gasoline Over 3000cc - Sedans and station wagons
Less than 10 Gasoline Over 3000cc 4×2/4×4 Excluding sedans and station wagons
Less than 10 Diesel Over 2500cc - Sedans and station wagons
Less than 10 Diesel Over 2500cc 4×2/4×4 Excluding sedans and station wagons
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Chapter 5: Car policies

5.1 Company Car Entitlement

Car Benefit Eligibility
Business Beed, Job Level or Grade, Market Competitiveness
Factors considered in Determining business need for car benefit
Necessity of a car ( E.G. Sales role with frequency of road travel)

5.2 Which sectors provide most fleet cars?

Agriculture, Chemical Industry, Pharmaceutical Industry
 
5.3 Which job functions include a company car?
 
Heads of organisations, Exec level, Sales
 
5.4 Reference Cars
  • Junior Levels : Toyota Rush, Honda City
  • Sales Levels : Toyota Innova, Toyota Avanza
  • Manager Levels :  Toyota Altis, Toyota Fortuner, Honda Vcivic, Honda CR-V
  • Exec Levels : Toyota Alphard, Toyota Camry
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Chapter 6: Funding methods

Overview of penetration of funding methods (buy or lease statement) Company Owns and Company Leases vehicle  ratio is about 30% and 70%.
Type of suppliers (captive versus multibrand, international versus local…)  
6.1 Outright purchase:  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.2 Renting (Finance lease) :  
Definition Financial lease is typically called capital lease in the books of the lessee and the finance
lease in the books of the lessor. The three conditions specified in the accounting standard
for a lease to be classified as a lease are as below:
a. End of term option to purchase the asset by the lessee at a pre-determined price at
the inception of the lease
b. Sum of periodic rentals and option price to cover the acquisition cost of the asset
c. A minimum lease period of 2 years.
However, if any of the three conditions is not satisfied the lease would be recorded as an
operating lease. Hence, if the lease is for 3 years instead, yet be a full pay-out lease, the
lease would classify as an operating lease?
Pro’s and con’s  
Economic & legal ownership Accountant treatment by the lessor:
- The net investment in the leased assets should be shown and recorded as “Net
Investment in Finance Lease”. This net investment is arrived at in the following
manner: [Lease Payments + Residual Value – (Unearned Lease Income + Security
Deposit)].
- The Unearned Lease Income is calculated in the following manner : [(Lease
Payments + Residual Value) – acquisition price of the leased asset].
- Where the Lessor sells the asset before the end of the lease period, the gain or loss
arising out of it, calculated as the difference between the selling price and the net
investment in the leased assets at the time of sale, has to be recorded in the current
year.
- Any other income arising out of a lease transaction should be recorded in the
income of the current year.
Accounting treatment in the books of the lessee:
- Lease transactions are treated and recorded as fixed assets at lease obligation. The
lease obligation refers to the present value of all the lease rentals and the residual
value at the end of the lease period. When the lease rentals are paid, they are
allocated as repayment of lease obligation and interest expense (on the basis of the
interest rate applied on the lease obligation).
- The present value of the lease rentals should be done as per the discounting rate
which is equal to the interest rate charged by the lessor or the rate of interest
prevailing in the market at the time of the inception of the lease.
- The lessee should amortize the asset on the basis of the estimated effective life of
the asset.
- If the asset is purchased before the end of the lease period, then the difference
between the amount paid and the carrying cost of the lease transaction should be
adjusted with the current year’s income.
- Leases should be presented as Current and Long term liabilities in accordance with
the practice followed by the lessee.
Business practices As there are many operational leasing suppliers, finance lease is not that popular in Indonesia
6.3 Full service leasing (operational leasing)  
Definition Indonesia offers traditionla full service lease, inlcuding maintenance, tyres, insurance, assistance. There are many (smaller) players in the market, most of them being secondary activities of other industries (STR, Car Import, …). The main local players offer products on duration, not on mileage.
The Japanese players (Orix & Sumitomo or "OTO") can offer more mature products, including mileage credit/debit.
Pro’s and con’s Operating Lease being CIT deductible, it's an interesting solution for the corporate customer. However, as there's a discussion whether operating leasings that extend 47 months, should become on balance, the duration is an important factor to take into account)
Economic & legal ownership The lessor owns the vehicle
Business practices  
6.4 Fleet Management  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.5 Short term rental  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.6 Other funding methods  
   
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Chapter 7: Fuel

Fuel infrastructure

The main player a the governement owned fuel supplier. Some other players are present, but their coverage is limited to the big cities.
Fuel card solution Available, but limited
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Chapter 8 : TCO components

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Chapter 9: Safety, insurance and telematics

9.1 Accident Rate and Evolution

225,000 Case (2013)
2013 Data
Road fatalities per1000,000 inhabitants per year : 15.3
Road Fatalities per 100,000 motor vehicles: 36.7
Total Fatalities latest year (WHO Report): 38279
 
9.3 Insurance offers 
 
Types of Car Insurance
There are many types of vehicle insurance:
 
Third party liability
Collision/total loss
Theft - for car or motorbike theft, it is very rare that the vehicle is recovered
Medical expenses
Natural disaster (flood, wind, earthquake, tsunami, volcanic eruption)
Riots and general civil disturbance
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Chapter 10: Environment

10.1 Trends in taxation, legislation and city restrictions

Since 2005, Indonesia has followed a less stringent standard, referred to as EURO II. Indonesia is one of only three Asian countries to use the looser standard, and also is one of a few nations worldwide to allow high octane gasoline use.
On March 10, 2017, Indonesia’s Ministry of the Environment and Forestry (Kementerian Lingkungan Hidup dan Kehtanan) issued a regulation considered to be a “legal umbrella” for the adoption of EURO IV emission levels. Djati Witjaksono, a spokesperson for the Ministry, stated that the new regulation would enter into force when officially issued by the Minister, Sitit Nurbaya Bakar.
 
  • Reduction of subsidized fuel by switching to using non-subsidized fuel (Euro 4), New Vehicle Types.
  • Automotive industry technology development (Euro 4 standard)
  • Euro 4 fuel preparation (especially Sulfur Content of 50 ppm, and the maximum content of bio-fuel/ethanol)
  • Campaigning "Use of Low Sulfur Fuel", (the lower the sulfur, the more efficient the fuel consumption, and the higher the concentration, the higher the sulfur emissions, PM, CO, NOx)
  • As of August 31, 2013, Euro 3 has been enacted for motorcycles so that two-wheeled vehicles must use a the Pertamax and Pertamax Plus types of gasoline
  • Euro 3 emission standards already apply to new vehicles because fuel is readily available for Euro 3
  • Fuel (especially gasoline) to go Euro 4, recently stipulated in Regulation of the Minister of Environment and Forestry No. 20 of 2017 in order to replace currently existing Euro 2 gasoline
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Chapter 11: Mobility

“hours spent in congestion”. According to INRIX’s data, Jakartans spend an average of 63 hours sitting in traffic per year

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Chapter 12: Key trends to watch

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