Business

Japan to urge Indonesia to cut auto tariffs as agreed in FTA

Kyodo

Japan will urge Indonesia to lower its tariffs on Japanese automobiles as agreed under a bilateral free trade pact that entered into force in 2008, trade minister Yoichi Miyazawa said Tuesday.

Miyazawa said Japan and Indonesia are expected to hold bilateral discussions on the matter possibly within this month. “It is true that (Indonesian) auto tariffs are not at the agreed levels. Naturally, we will discuss the matter in our consultations,” the minister told a regular news conference.

Under the deal, Indonesia agreed to cut its 45 percent tariffs on some Japanese passenger cars with an engine displacement of 3,000 cc or less to 20 percent by the start of 2015, and eventually to 5 percent in 2016. But Jakarta is still imposing 22.5 percent tariffs as of 2015, according to the Ministry of Economy, Trade and Industry.

Indonesia is a promising market for Japanese automakers.

In 2014, exports of passenger cars to Indonesia totaled some ¥40 billion ($328.6 million).

Jakarta has explained that it has not been able to adopt the agreed tariff rates due to procedural errors, the ministry said.

The two countries launched free trade negotiations in July 2005. Japan’s key export items include automobiles and other industrial goods, while Indonesia ships natural gas and petroleum products.