Low Cost Green Cars on the Grill

http://m.thejakartapost.com/news/2013/09/28/your-letters-low-cost-green-cars-grill.html

My husband and I were waiting impatiently for the 21st Indonesia International Motor Show (IIMS) 2013 to kick off at the Jakarta International Expo Kemayoran, Central Jakarta last Thursday. With theme “Smart Vehicle Mobility”, we were anxious to see the eco-friendly cars took center stage. It’s been awhile since we wish to replace our obsolete car with the affordable low cost green cars (LCGC).

After all who doesn’t want to get ‘cheap’ car while helping the environmental cause at the same time? Less carbon less toxic air! It’s a good cause helping our beloved atmosphere to breathe easily, isn’t it?

Not to mention that fuel and energy efficiency are in the entire nation’s interest, considering that they are one of the crucial elements constantly blamed for this nation’s latest current account deficit problem. It is in the economic interest because the less fuel consumed the lower current account deficit we suffer.

In addition, as the VP Boediono had elaborated that the automotive sector is a strategic industry that can support three pillars of the national industry namely added value, labor absorption and exports. It is also in the environmental interest because the less pollutants emitted the less damage to the environment.

The Arising Problem

The biggest concern however, do major big cities that have been going all out for a crusade against severe traffic gridlock need this policy anytime soon? Do these so-called LCGC serve their function well amid clogged roads throughout the cities?

I am afraid if the policy was carried out anytime soon, it would result in counter-productive result: worsening nightmarish traffic congestion and less fuel and energy efficiency.

Worsening Gridlock

As announced, the government would provide fiscal incentives including tax reduction for LCGC producers that would provide affordable cars for low-and middle class people. The favorable tax breaks have quickly encouraged Toyota and Daihatsu to join Honda to launch their eco-friendly models with price tag between Rp 76 million and Rp 120 million ($6,660-$10,500).

It means more and more people will swift from public vehicles to private ones. The Indonesian auto sales has surged 25% to a record in 2012, with some 1.1 million vehicles sold last year despite more stringent down payment requirements.

 Oh yeah, roughly 65% of sales of new cars are on credit, and for motorbikes, it may be even higher. This growth is worrisome. To avoid potential bubble in consumer credits, the central bank has applied loan to value and down payment regulation.

Nevertheless, this year automotive sales still looks set to keep growing strongly. The Indonesia Automotive Industry Association has forecast 2013 sales at 1.1 million vehicles. With automakers are now developing more LCGC for the domestic market, the sales might go double even more. More consumers will swap their two wheels for four wheels.

As a result, the number of cars would be massive and staggering, growing ten time times or perhaps dozens faster than the roads they roll on. The prediction in 2009 that the Indonesian capital could experience total gridlock by 2014 might come sooner than expected.

Less Fuel and Energy Efficiency

With the prospect of hundreds of thousands of low-cost cars hitting the already polluted and over-crowded roads around Jakarta and other big cities, many environmentalists are dreading the ghastly consequences. The popular Jakarta Governor Joko “Jokowi” Widodo, has also voiced his concern over this LCGC promotion.

Without LCGC, severe clogged roads already paralyze Jakarta with the sheer number of the cars and motorcycles around. The problem has burdened the city with massive cost in economics and health loss. It is a plague Jokowi has vowed to tackle along the flood. Yet, the grim outlook of massive increase of cars flooding the streets, his task becomes the like of Sisyphus.

LCGCs may be more fuel-efficient than bigger cars, but they will still emit carbon and nitrogen oxide (NOx). If their numbers increased massively, that the term green cars would mean nothing because cumulative pollution would be higher than it is now. The sorcery surrounding LCGC stands to worsen public health and the environment rather than the intended opposite.

On top of that, increased cars mean increased fuel consumption. The nation already swallowed the bitterest pill by keep subsidizing fuel that burden the nation with current account deficit. If more and more people buy LCGCs, then the government should increase the fuel quota and more subsidies.

Promoting Affordable, Comfortable & Reliable Massive Public Transportation

Looking at this prospect, I am afraid the cost of LCGCs outweighs the benefits. In the current policy and regulatory framework, the low-cost cars will be disastrous.

In my personal opinion, prior to enrolling the policy, the government should first consult and coordinate with related parties; local governments, automotive industries, environmentalists, public policy experts and watchdogs among others. The policy should not contradict with that of local governments, which find reducing cars to combat traffic gridlock is indeed a pain in the ass.

Rather than promoting LCGC, the government should first support affordable, reliable, and comfortable public transportation. Tax incentives should be first given priorities to these public massive transportations to reduce the nightmarish traffic congestion. Only after this problem is tackled properly, then we can discuss about LCGC.