Automotive Sector Layoffs Loom Amid Vehicle Tax Increase, Central Java APINDO Chair Warns
Saturday, 26 April 2025
CENTRAL JAVA – The automotive sector is reportedly being impacted by the implementation of the new vehicle tax surcharge (opsen pajak kendaraan bermotor), which took effect at the beginning of 2025.
The policy is raising concerns about a potential wave of layoffs, as purchasing power declines and vehicle sales continue to drop.
Frans Kongi, Chairman of the Indonesian Employers’ Association (APINDO) in Central Java, acknowledged the risk of job cuts, though he noted that mass layoffs have not yet occurred.
“There’s definitely an impact, but no large-scale layoffs yet. A drop in production is inevitable, and employee furloughs could happen,” Frans stated on Friday, April 25, 2025.
He explained that the automotive industry is particularly sensitive to additional tax burdens such as the opsen. Without proper anticipation and mitigation, production adjustments and workforce reductions could occur in the near future.
Meanwhile, Herman H. Suparman from the Regional Autonomy Implementation Monitoring Committee (KPPOD) echoed this concern, warning that layoffs could begin within the next two months.
“Dealerships have already started holding back. If this continues, we may see layoffs within one or two months. The provincial government must step in,” he stated during a public discussion in Semarang.
To prevent further disruptions, Herman urged the Central Java government to offer incentives to affected industries.
“In the short term, this policy is only temporary. But ultimately, it all comes down to the local regulation (perda). Businesses need legal certainty,” he emphasized.
Herman also praised other provinces such as West Java, East Java, and the Special Region of Yogyakarta for providing relief through regulatory relaxations on the opsen.
Responding to the issue, the Central Java Regional Revenue Agency (Bapenda) has proposed eliminating the progressive tax for second vehicles as a form of public relief.
“People won’t need to worry about buying more than one vehicle… progressive tax won’t apply anymore,” said Danang Wicaksono.
While the opsen policy is intended to strengthen regional fiscal capacity, it now faces the challenge of balancing fiscal goals with the sustainability of productive economic sectors like automotive.
Source: www.bantenekspose.id
