Growth of automotive industry encouraging: Minister

Jakarta (ANTARA News) - The Indonesian automotive industry is increasingly undergoing good growth as evident in the increasing investment by automotive factories in the country, Industry Minister Saleh Husin said.

"The growth of the automotive industry is good. Toyota for example has invested some Rp20 trillion for its automotive development from 2015 to 2019," noted the minister here Thursday.

Toyota had spent Rp5 trillion in 2015 and would invest Rp5.4 trillion in 2016, he said.

Based on the industry ministrys data, Toyota controls about 31 to 32 percent of the automotive market in Indonesia. It has made an investment of Rp40 trillion in Indonesia up to 2014 while in the period of 2015 - 2019, Toyota is to complete the construction of its machine factory in Karawang, West Java.

He appreciated other automotive industries which are serious in investing in Indonesia by opening new factories, either for assembling or for manufacturing of spare parts, Saleh Husin said.

"Mitsubishi has built a new factory worth Rp3.5 trillion and Wuling of China has made an investment of Rp11 trillion," Saleh Husin remarked.

His ministry has coordinated with the relevant ministries to maintain the investment climate in Indonesia. With investment climate being maintained, investors would not move to neighboring countries, the minister acknowledged.

"If Vietnam offers incentives, the investors will move to that country. So, we have to compete with it. In short, we are coordinating with other ministries to create convenient and conducive investment climate," he said.

The decision of Ford to stop operations in Indonesia was not a signal of decline in investment interest in automotive industry in the country, Chief of the Capital Investment Coordinating Board (BKPM), Franky Sibarani said late last month.

Fords decision to stop operations in the country would have no impact on investment in the automotive industry in Indonesia, Franky Sibarani said.

"Interest is still strong in venturing into the automotive industry in the country," he added.

Ford has operated only as a car importer, offering after sales service, maintenance and repair, he said.

"It has no license in the automotive industry," he added.

PT Ford Motor Indonesia, an Indonesian business unit of Ford, the producer of American cars, has announced its plan to stop operations in the country before the end of this year.

PT FMI said in its electronic letter that it saw no prospects of profit in its operation in the country. The company, however, assured its customers that it would continue to facilitate supply of services and spare parts for Indonesia.

Based on data at BKPM, total investment in the country in industry producing transport equipment including automotive industry was valued at Rp23.57 trillion in 2015, up 6.5 percent from the previous year.

Foreign investments in the automotive sector both in manufacturing and services (trade and repairs) were valued at Rp21.6 trillion in 2015, up 13 percent from the year before.

Meanwhile, Chinese automotive company Wuling is building a car factory with total investment of US$397.4 million to be completed in 2017.

Fifteen automotive component producers would cooperate with Wuling, which would produce cars the type of multipurpose vehicles (MPV), Franky said.

Wuling will have a production capacity of 84,000 units a year and would have a spare parts plant.

Based on data at OICA (International Organization of Motor Vehicle Manufacturers), the ratio to population in Indonesia is 77 to 1,000 as against 397 to 1,000 in Malaysia.

The ratio shows that the market still has high potential in Indonesia.(*)