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December 8, 2008

Indonesia govt concerns over mass layoffs in car industry
The Indonesian government along with other stakeholders will make all efforts to avoid mass-layoffs in the auto industry in 2009 including through halting production, reported national news agency Antara.

"What is important is to avoid lay-offs of both permanent or contract workers. Overtime may also be cut," the director general of transport industry and telecommunications and information of the ministry of industry, Budi Darmandi, said over the weekend.

He said sales in 2009 were expected to reach as many as in 2008 namely six million units. He expressed optimism that the target may be achieved following the drop in the key rate.

Asked about a car or motorcycle manufacturer that had already stopped production, he said that each industry certainly had its own policy in overcoming the crisis including stopping production temporarily.

"It is like a restaurant. It will not cook if no order had been received, while its chef, manager and workers are still there," he said.

He said what had happend in the Kanzen motorcycle manufacturer was that production had been stopped because of slow market absorption caused by unavailability of credits. He added that some customers had made down payments while some others had not, but the products were still available.

"This manufacturer has stopped production just to prevent unused money. There have been no lay-offs but only suspensions," he said.

He said that 80 percent of motor vehicle purchases was financed by credits. He hoped the central bank would cut the key rate further to promote cashflows.

On interest rates he said "we can share it so that consumers will not bear all the burden. Producers, dealers, leasing agencies can share the interest burden so that the auto industry can move on," he said.

On government plans to postpone the implementation of the progressive system of auto taxation in 2009 he said everything would be done according to the existing policy.

The general chairman of the Association of Indonesian Motocycle Industry who is also president director of PT Indomobil Sukses Internasional Tbk, Gunadi Sindhuwinata, meanwhile said that the auto industry always adjusted its production capacity to principles of efficiency and effectiveness.

"So a halt in production for one or two days must happen following thorough consideration to prevent extravagance. It has all been done in consideration of needs, stocks and availability of raw materials," he said.

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