ASEAN KEY DESTINATIONS
RI car production could reach 2.2m by 2017
About 100 local and foreign businesses are planning to build automotive component factories to take advantage of Indonesia’s growing car production, which is expected to reach 2.2 million cars in 2017, according to the Association of Indonesian Automotive Manufacturers (Gaikindo).
“Around 100 businesses have applied to construct component production facilities, 30 have received the green light from the Industry Ministry,” the association’s secretary-general, Noegardjito, said on the sidelines of the 2014 Indonesia International Motor Show (IIMS) in Central Jakarta last week.
“Perhaps in the near future, the five big car manufacturers will also open component plants.”
Noegardjito said that the industry had developed a strong presence as an automotive production base with a reach beyond the region. At present, Indonesia exports to 80 countries including across ASEAN, the Middle East, Latin America and Japan.
Noegardjito also said that the government needed to learn from the success of the automotive industry in Thailand, which spent a lot of money to develop infrastructure facilities to support the industry.
According to Budi Darmadi, the Industry Ministry’s director general for high technology industries, this year’s production capacity surged due to the realization of new investments during the last two years.
“And with Mitsubishi and VW [Volkswagen] recently announcing their plans to invest this year, the production capacity at the national level could reach 2.2 million cars by 2017,” Budi told reporters during the exhibition on Friday. With such a production level, Indonesia could replace Thailand as the largest car producer in Southeast Asia.
Thailand, the main automotive hub in the region, is expected to produce about 2.1 million cars this year, down 15.7 percent from the figure recorded last year, according to Ipsos Business Consulting.
Data from Gaikindo shows that the country produced 1.2 million cars in 2013. Production from January through August this year reached 878,000 cars, up 14 percent from the same period last year.
The association’s chairman Sudirman Maman Rusdi said on Thursday during the opening of the IIMS that car production in Indonesia would be able to reach 1.4 million cars by the year’s end.
A few days ago, Mitsubishi Motors, a subsidiary of Japanese trading giant Mitsubishi Corp., announced a plan to invest US$600 million to build a multi-purpose vehicle (MPV) factory in Bekasi, West Java that would supply both domestic and overseas markets.
The plant, which is slated for commercial operation in the first semester of 2017, would increase Mitsubishi’s production capacity by 160,000 cars per year.
With production capacity increasing to 2.2 million cars per year by 2017, Budi said that the country’s total car production rate could reach 1.7 million cars. “By then, we will be able to export 300,000 completely built-up [CBU] cars,” he added.
The government is currently seeking to export 320,000 CBU and completely knocked-down (CKD) cars this year, with another 360,000 cars set for next year.
Budi said he was optimistic that the automotive industry would be able to surpass the government’s target. “If this year’s exports for CBU and CKD cars can reach 340,000 cars, we’ll be able to exceed the government’s 10 percent export target,” he said.
Previously, Trade Minister Muhammad Lutfi said he expected the country’s automobile exports to
grow from $4.5 billion projected in 2014 to $11 billion in the next five years, making it the third-largest industry in terms of export volume after the palm-oil and footwear industries.
He also predicted that production capacity would reach 5 million cars per year in the next 10 to 15 years.
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