The Indonesian Tire Manufacturers Association (APBI) said in a media release this week that the national tire industry is expected to increase 10 to 15 percent. This would also be supported by the high increase in economic growth.
The country`s economic growth could be made as reference for the market prospects of tire in the country in the coming years.
According to www.scribd.com, the International Monetary Fund (IMF) has predicted Indonesia`s economic growth at 6.2 percent for 2011 with the world`s car production forecast to grow 8.9 percent to 64 million units.
Based on the predictions, the country`s production of tire is expected to grow faster to follow the growth of car and motorcycle industries in the country and in the world. The tire industry suffered a setback in 2009, but in 2010, it recovered quickly marked with a sharp increase in production and sales.
The country`s production of car tires in 2010 surged 28.8 percent motorcycle tires shot up by 43.2 percent compared with in 2009. Sales of tires in replacement market grew 23.8 percent sales in original equipment/OE market (car factories) climbed by 54.4 percent and exports rose by 25.4 percent.
In 2005, the country`s tire production rose 16 percent when the country`s economy expanded 7.2 percent. In 2010, tire production surged 33.7 percent when the economy grew 5.8 percent.
Tire sales in Indonesia in 2010 increased by 23 percent from 2009, or approximately 49.5 million tires. Besides, tire exports in 2010 also increased 25 percent from that of 2009 to 35.1 million.
APBI chairman Aziz Pane said several occasion of late that tire sales in Indonesian in the first quarter of 2011 increased seven percent year on year. This was supported by the increase the sales of vehicles in the country.
The expansion of the production capacity is to keep pace with growing demand from fast growing automotive industry and from export markets in Southeast Asia, Oceania, Middle East and Africa.
At the same time, Indonesia is also the third largest market in Southeast Asia after Thailand, where an estimated 620,000 cars were sold, and Malaysia, with some 485,000 a couple of years ago.
Increase in car and motor vehicle sales and relative high economic growth gave a boost to the development of tire industry at home. After all, Indonesia is known as one of the biggest rubber producer in the world with a total production of 2.92 million tons in 2010.
Indonesia, Thailand, Malaysia and Vietnam collectively supply 95 percent of the world rubber demands.
The bright prospect for tire Industry at home has also attracted a South Korean tire producer to the make its investment in Indonesia.
South Korean tire maker Hankook Tire will invest 353 million US dollars in Indonesia to build factories that are to employ a total of about 2,800 people by 2018.
"Building a factory in Indonesia which is in the middle of the global market is a decision that will be beneficial for the economy of Indonesia and also Hankook Tire," CEO of Hankook Tire, Seung Hwa Suh, at the inauguration of a tire plant in Bekasi, West Java, said last week.
Minister of Industry, MS Hidayat expressed happiness for the fact that Hankook Tire has chosen Indonesia as a location to develop a global business strategy, which according to the Investment Coordinating Board (BKPM) chief, Gita Wirjawan, will strengthen business relations between Indonesia and South Korea.
In the first phase, Hankook Tore will invest 353 million US dollars with an initial production capacity of about 6 million tires per year. It plans to have hired about 1,400 workers by 2014 and 2,800 by 2018.
"Hankook Tire is to make a strategic investment in Indonesia to meet the high demand for high-quality tires for its globally expanding business," Seung Hwa Suh said.
The factory which is worth a total of 1.1 billion U.S. dollars is planned to have four major production facilities covering an area of 60 hectares and will become an export base for the North American market and the Middle East as well as a regional hub for developing countries in Asia.
About 70 percent of its tire production in Indonesia is expected to be exported to the Middle East, ASEAN countries and the United States. However this plan could change depending on market conditions owing the fact that tire consumption in Indonesia was high.
"The percentage of exports will depend on the market situation in Indonesia," the Hankook Tire chief executive officer said.(*)
Reporter: Andi Abdussalam
Editor: Aditia Maruli Radja
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