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Breaktrough in Policy and Business Innovation Effort Toward

Global Market
Case Study : LCGC ( Low Cost Green Car ) Effect to Indonesia and Effect
Business for Global market

International Seminar : RMIT Hanoi


20 September 2016

Abdul Majid / 1510632020001


Faculty : Post Graduate, Magister Management
Universitas Singaperbangsa
2016

Summary
Indonesia has experienced at program National Car. The first at middle 90 s
( Timor) and this program is protested by all maker car from Japan, USA and
Europe, caused by financial crisis 1998 and facility tax is cancelled by IMF
and Soeharto goverment finished, National Car program / Timor is finished.
2nd program for National Car, there is LCGC.
That is The Breaktrough Policy of former President Mr SBY. 5 Car
maker
(Toyota, Daihatsu, Suzuki,Honda and Nissan ) support this program in the
other hand , House of Representative is not full support and the first
period
recent goverment not support to, but until right now the program still
running and success
For Car maker that is Business innovation , to boost market not only for
local market but to global market. Data 2015 from GAIKINDO ( Assosiation
of Indonesia Automotive Industry ) sales of LCGC 165,434 , 16,3% from
National sales and some export for Global Market for Philiphina, Malaysia
and Pakistan.
This paper is to study how LCGC effect to Indonesia in general and direct
economic effect to Indonesia and how is effect business to the owner
brand of LCGC?

Contents of Main Idea


1. History policy of National Car and
Breaktrough the Policy about LCGC
2. Business innovation of Car Maker
3. Impact Economic to Indonesia and Direct
effect for Owner Brand to Global Market
4.Conclusions
4. References

1. History Policy of National Car


First Brand Indonesia of National Car is Timor , based on President
instruction No 2 year 1996
Goverment decided to apppoint PT Timor Putra National as Pioneer National
Car, PT TPN is property of Hutama MP , son of President.
Timor Car officially launched at 8 July 1996 at Jakarta. PT TPN cooperate
with KIA motor, South Korea Car Manufacturing. PT TPN would make model
KIA Sephia in Indonesia.
At the first years Timor would be built full completely build up (CBU) at
South Korea, and imported to Indonesia, caused the facility of assembling
not Ready.
For increase sale , Timor Car have special treatment , the privilege of tax
exemption of luxury goods to make the price cheaper than other cars. "PT
Timor Putra Nasional privilege incredible luxury tax exemption of 60
percent,
Timor Car by 50% below car competitor , price around at IDR 35 Million.
Japan, USA, and some Europe country to protest right privilege . This Case
is carried to World Trade Organization (WTO). WTO need Indonesia revoke
decision free import duty and luxury tax
At 1997, Timor production stopped caused by financial crisis , program
National car facility cancelled by IMF and former Presiden finished.

1.1 Definition of Public Policy


In the book of Harbani Pasolong, Teori Administrasi Publik , some definition as below :
1.Thomas R. Dye (1981), says that public policy is "whatever the government to do or not do".
2.William N Dunn (1994), says that public policy is a series of choices that are interconnected created by
agencies or government officials in areas relating to government functions, such as security and defense,
energy, healthcare, education, public welfare, crime, urban and others.
3. Shiftz & Russel (1997) defines public policy with a simple and say "whatever government is dicides to
do or not to do".
4. Meanwhile, Shiftz & Russel (1997) defines public policy with a simple and say "whatever government is
dicides to do or not to do".
5. Meanwhile, Shiftz & Russel (1997) defines public policy with a simple and say "whatever government is
dicides to do or not to do".
6.While Chaizi Nasucha (2004), says that public policy is the government's authority in making a policy
used in the device legislation. The policy aims to absorb the social dynamics within the community, which
will be used as reference for the formulation of policies in order to create harmonious social
According to Carl Friedrich, public policy is a course of action proposed by a person, group or government
in a given environment are on the obstacles and opportunities of the proposed policies for the use and
overcome in order to achieve a goal or realize a goal or a purpose certain.
According to James A. Anderson, "...... .a purposive course of action Followed by an actor or set of actors
in dealing with a problem or matter concern." (A series of actions that have a specific purpose followed
and implemented by a perpetrator or a group perpetrators in order to solve a problem

1.2 From above understanding of that public


policy has the following characteristics:
1. Always have a specific purpose or a goaloriented action.
2. Contains action or pattern of actions of
government officials.
3. It is what is actually done by the government.
4. Characteristically positive in the sense of an
action carried out and the only negative in the
sense that the decision was intended to not do
something.
5. The policy is based on regulation or legislation
coercive

1.3 Stages of Making Public policy by William Dunn is as follows:

1. Preparation Agenda
The issue of policy is a product or a function of their good debate about the formulation, details, explanations as well as an
assessment of a particular issue. But not all issues can be entered into a policy agenda. Policy agenda should be based on the degree
of urgency and the essence of the policy, as well as stakeholder involvement. A policy should not obscure the importance level, the
essence, and stakeholder engagement.

2.Formulasi policy
Problems that have been included in the policy agenda was discussed by policy makers. These problems are defined and subsequently
look for the best solutions. Solving the problem comes from a variety of alternative or selection policy. Similarly, the struggle of an
issue to the agenda of the policy, the policy formulation alternative phase each competing to be selected as the measures taken to
solve the problem.

3. Adoption / Legitimacy Policy


The purpose is to give legitimacy on the basis of government authorization. If the action legitimacy in a society governed by the rule
of the people, the citizens will follow government directives. However, citizens must believe that government action is legitimete.
Support for the regime tends to diffuse - a backup of a good attitude and good faith of the government actions that help member
tolerate . Administration can be managed through the manipulation of certain symbols. Where through this process, people have
learned to support the government.

4. Assessment / Evaluation Policy


In general it can be said as a policy evaluation activities regarding estimates or judgments include the substance of policy,
implementation and impact. In this case, the evaluation is seen as a functional activity. That is, the policy evaluation is not only done
at the end of the course, but the whole process is done in the policy. Thus, the policy evaluation may include the formulation stage
many policy issues, programs proposed to solve the problem of policy, implementation, as well as the stage of policy impact

1.4 Policy of LCGC as Breaktrough


Indonesia Goverment launch of rule Low Cost & Green Car(LCGC) at
year 2013 at rule No . 41 /year / 2013 of Taxable Goods of the Luxury
category Motor Vehicles Subject to Sales Tax on Luxury Goods, including
LCGC, program low carbon emission, electric cars, hybrid biodiesel.
Government regulations will clarify the procedures and the support
rule of ministry odf Industrial No. 33/2013 on the Development of Four
Wheel Motor Vehicles The Energy Efficient and Affordable Prices
(KBH2) or low cost and green car (LCGC). The regulation, energyefficient motor vehicles and affordable prices using additional
Indonesian brands, models and logos that reflect Indonesia.
Article 3, paragraph 1 (c) Regulation No. 41 of 2013 mentions for
energy-efficient cars and reasonably priced, the Sales Tax on
Luxury Goods on taxable goods by 0 percent of the sales price.
The 0 per cent tax for motor fuel said the fire with a cylinder
capacity of 1200 cc and fuel consumption of at least 20
kilometers per liter of fuel or the equivalent.
Lastly, for the first phase, the government will ask the manufacturer to
make up about 40 % of the components in the domestic car with the
type of group the components to be determined later. The next is
expected in the fifth year, the APM can increase its local content to 80%
with the type of production of components made in Indonesia about 10
groups of components

1.5 Why this Policy is a Breaktrough


# Antipathetic about the Policy at 2013
1.The Governoor of Jakarta,present is Preseident , Mr Jokowi, protest to
Vice President 17 Sept 2016
Sales of this LCGC will give potencial effect a traffic jam to Jakarta.
The transport system to people be needed today is a convenient
public
transportation, safe and affordable, not an incentive to have a
personal vehicle. Jakarta Provincial Government will also increase the
motor vehicle tax (PKB) and the Customs of Vehicle (BBN KB).
It will increase the local tax for the city.
Jakarta Local Goverment will plan to apply the high cost of the policy
electronic road pricing (ERP). ERP policies are now included in the
assessment phase of the tariff to be charged every pass through
certain streets in the capital.
2.House of Reprentative , double faced
3.Some observers transportation
Actually , present President Mr. Jokowi continue the above program

2. Business Innovation of Car Maker


Innovation according to the Oslo Manual (2005) is "the implementation of a product (whether in the
form of goods and services), process, marketing method or organizational new method improvised
significantly". Innovation invention relates to (findings) for an invention can be called innovation as
having value. Values that is benefits to capital to increase capacity, productivity and social and
economic welfare . So there is a common thread between invention, innovation and socio-economic
so it makes sense to say that a country more increasingly innovative high-level socio-economic
achievements (welfare) it.
Various international institutions such as Goldman Sachs, The Economic and Word Bank predicts that
Indonesia is likely as the economic powerhouse of the 21st century. The election of Indonesia as one
of the ASEAN countries were included in the group G-20 as if the initial authentication of such
predictions. However, predictions and odds not become a realistic if not accompanied by concrete
action. One of the steps taken by the government was proclaimed Vision of Indonesia 2025". In
2025 Indonesia is targeting a top 12 worlds economic strength with GDP of 3.76 trillion dollars.
This means that economic growth must be inreased 5-6 % in 15 years that a significant. This
increasing can not be done only with the choice of conventional approaches of economic activity
needs a new approach known as Inovation . Innovation economy in question is a new phase
characterized by changing times were very fast and dynamic, or it could be called a state capable of
providing a way out to replace ideas, products, services and process -long process.
In this innovation economy will be "radicalization" in which radical innovation will also change the
way of our measures of progress economics and increase productivity rests on the power of human
capital with his mastery of science and technology.
Zuhal agree with Joseph Schumpeter (1942) that the innovation economy era as an era when
science, technology, entrepreneurship and innovation become the main driver of growth, not the
accumulation of capital, nor the use of scarce resources as defined in the classical economic model.

The global competition in the field of economy and trade has led to various impacts,
which is characterized by various trends below (Hitchkock 2009; Unido 2010 in GumbiraSa'id, 2012):
Increased product prices has led to the seizure of raw materials for food, feed and
energy
Increased income of the people has caused demand for high value products is increasing
and diverse
Technological innovations produce a large increase in added value
Globalization and trade liberalization led to increased demand for cross country
Urbanization will lead to increased awareness of product quality and standards delivery
Changes in diet have led to more consumption of meat, fish and fruits
Increasing the number of women working led to an increase in demand of processed
food
Global Manufacturing has led to the growth strategy of adding value and use of
standards (Certificate).
Innovation for economic growth (Yu, 2008) requires four mutually reinforcing pillars,
namely:
(1) National Innovation System that manages a network of institutions, policies, rules and
procedures,
(2) the availability of educated labor and skilled,
(3) The information and communications infrastructure, as well as
(4) the existence of the regime and economic institutions conducive.

2.1 First National Show of LCGC


# Toyota and Daihatsu case
First show of their vehicle Toyota Agya and
Daihatsu Ayla at IIMS September 2012.
The Car is designed local designer mr Mark
Wijaya , based on internal reaserch .
Indonesian people need Ground Clearence
High cause some infrastructure not good,
floods and others.
Toyota and Daihatsu , why will realease car
without rule or protection from
Goverment ?
Rule LCGC PP no 41/th 2013 realease at 23
May 2013

2.1 One step over the competitor


The presenting of Toyota Daihatsu small car Agya
Ayla at IIMS 2012
At the award event held MarkPlus Inc.,
Marketeers, and MarkPlus the Insight,
Toyota Agya managed to get awards in three
categories, namely New Wave Clarification
Award 2012, New Wave commercialization
Award 2012, as well as New Wave
Collaboration Award 2012
Innovation according to the Oslo Manual (2005) is
"the implementation of a product (whether in the
form of goods and services), process, marketing
method or organizational new method
improvised => Done by Toyota Daihatsu

3. Impact Economic to Indonesia and Direct effect


for Owner Brand to Global Market

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