Jakarta (The Jakarta Post/ANN) - Japan's largest automaker Toyota Motor Corporation (TMC) said on Wednesday it would invest an additional 15 billion yen (US$194.80 million) in Indonesia to raise the production capacity of its second plant in Karawang, West Java, from 70,000 to 120,000 cars.
"We want to expand our exports and meet the higher domestic demand for passenger cars," TMC executive vice president Yukitoshi Funo said.
He added that the second plant would operate at a full capacity of 120,000 cars by early 2014.
"This figure and our initial investment of ?26.3 billion will take our total investment in the second Karawang plant to ?41.3 billion," he said at a press conference after meeting Industry Minister MS Hidayat at the ministry's office.
At present, Toyota's original Karawang plant, operated by PT Toyota Motor Manufacturing Indonesia (TMMIN) - 95 per cent owned by Toyota and 5 per cent controlled by PT Astra International - is able to produce 110,000 units of cars, such as the multi-purpose vehicles Kijang Innova and Fortuner, per year.
The planned upgrade will bring TMMIN's total production capacity to 230,000 units starting from 2014.
Funo further said the second Karawang plant would produce new models of passenger cars, apart from the existing models, but declined to specify details.
"The planned products are those with the potential to be exported to other Asian countries, the Middle East, etc.," he said, adding that the company would increase its exports as requested by the Indonesian government.
President director of TMC's marketing arm in Indonesia PT Toyota Astra Motor (TAM) Johny Darmawan, who is also TMMIN vice president, said with more production from the second plant, his firm would initially increase its export allocation from between 15 per cent and 20 per cent at present to 30 per cent, with the possibility of a higher proportion for export in the future.
"We will increase our export share to about 30 per cent. The export destinations include Australia, New Zealand and African countries," he told reporters at the Industry Ministry.
TAM sold 311,136 cars last year, controlling 34.8 per cent of the country's auto market.
When asked whether the firm would receive tax breaks from the government, Industry Minister Hidayat said the government would review the added value brought by the new investment.
"We will see the multiplier effects it will create, such as the introduction of supporting industry, labor absorption and transfers of technology. These factors will be our considerations in determining whether it deserves to receive incentives or not," he said.
The automotive industry is one of 129 business sectors that can benefit from tax reductions as stipulated in a recently revised government regulation.
With its population of 240 million and a growing middle class, Indonesia is a lucrative market for car sellers. Along with sales of motorcycles, sales of cars are considered a key indicator of consumption in Southeast Asia's largest economy as they are mostly purchased by middle class consumers.
Earlier this year, the Indonesian Automotive Industry Association (Gaikindo) estimated that auto sales would only grow 3 to 5 per cent from 894,180 units in 2011 to 930,000 this year due to a potential spillover from the global economic downturn and planned subsidized fuel restrictions in April.
Indonesia expects car sales to break 1 million units in 2013 and is ready to overtake Thailand as the biggest automotive market in the region.
There are no comments yet