Minister hopes low cost cars won`t boost fuel consumption

Jakarta (ANTARA News) - The Deputy Minister of Finance Mahendra Siregar expressed hope on Monday that sales of Low Cost Green Cars (LCGC) would not boost national consumption of subsidized gasoline in the country.

"It is certainly hoped that this will not lead to an increase in the use of subsidized gasoline. But whether or not fuel imports will rise because of these cars remains to be seen. Logically, if gasoline consumption per car is reduced, the overall consumption should also dip. But one must take into consideration people, who were earlier using motorcycles and now might prefer to drive cars. However it is still too early to speculate on it," he said.

The government`s decision to produce LCGC has sparked disagreements from various quarters, especially from Jakarta governor Joko Widodo, who thinks the policy would certainly worsen traffic congestion in the capital city.

Meanwhile, Vice President Boediono supports the policy and has said that people must not be banned from buying cheap cars and that traffic congestion can be handled by the regional governments through various systems, including the application of electronic road pricing.

Siregar pointed out that the policy was expected to give a fillip to the use of local automotive components, which would in turn boost investment.

"What we know is that most components used in the LCGC are locally made and so LCGC cars will have a bigger multiplier effect and add more value than non-LCGC vehicles," he noted.

He further added that he did not expect an increase in capital goods components as less investment would be made in new engines, due to the exploitation of existing capacity using an energy saving technology.

Siregar also noted that stepping up the use of biofuel as a substitute of oil fuel should be given a priority at the moment.

"That is more concrete. It does not matter whether it will later be used for LCGC or non-LCGC cars. Promoting the use of compressed natural gas is also important. Focus must be placed on this strategic step," he stated.

The minister hoped that fuel consumption would be lower, compared with last month, as a result of which the country`s current account deficit would also be smaller.

Reporting by Zubi Mahrofi