Jakarta. An economic think-tank recently revealed that Indonesia’s plan to import 105,000 Indian pickup trucks can slash the economy by Rp 39 trillion ($2.3 billion) and trigger mass layoffs.

State-owned agricultural firm Agrinas Pangan Nusantara intends to import 105,000 units of Indian-made light commercial vehicles and light trucks as part of a nationwide cooperatives program. The Mumbai-based Mahindra & Mahindra will supply 35,000 Scorpio pickup trucks. Tata Motors India will ship around 70,000 units, of which 35,000 are Yodha Pick-Ups, and the rest are Ultra T.7 trucks. These new rides will support the government’s so-called Merah Putih Village Cooperatives program, a nationwide initiative aimed at cutting the food distribution chain and slashing prices.

“Our study shows that the import plan can create Rp 39 trillion in economic loss,” Bhima Yudhistira Adhinegara, who heads the think-tank Celios, said.

The imports will spur competition with domestic manufacturers, potentially causing 330,000 workers to get laid off. Bhima went on to say that now isn’t the best time to make massive imports. He pointed out how the domestic auto industry is currently under pressure.

The ill-timed import is estimated at around Rp 25 trillion ($1.5 billion). The Indonesian Automotive Industries Association (Gaikindo) — comprising 61 members that are predominantly Japanese automakers — reported that it could produce around 2.5 million of four- or more-wheeled vehicles. Gaikindo members also boast a combined annual pickup truck production of 400,000 units, which remains underutilized. 

Gaikindo chair Putu Juli Ardika said that domestic manufacturers were capable of meeting such big orders, “but they would need time to meet the required quantities and criteria."

Joao Angelo De Sousa Mota, the president director of Agrinas, said that his company had picked the two Indian automakers due to their affordability. In his estimates, Agrinas is expected to save up to Rp 43 trillion (approximately $2.6 billion) from producing the vehicles directly from India. Making the same orders via e-catalogue and domestic procurement can cost Rp 121 trillion ($7.2 billion). Joao Mota also said that the domestic industry did not have enough production capacity for the rural cooperatives program.

“Having the domestic production entirely focused on this program can disrupt the other logistics industry. We wish to safeguard harmony,” Joao Mota said.

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