The implementation of the Association of Southeast Asian Nations (ASEAN) free trade agreement (AFTA) and recent political turmoil in Thailand have opened up an opportunity for Indonesia to become the regional production hub for automobiles and auto components.
A deputy chairman of the Indonesian Automotive Industry Association (Gaikindo), Johnny Darmawan, said Indonesia had the chance of replacing Thailand, which is currently the production base for automobile and component manufacturing in Southeast Asia, for several years to come.
“Fundamentally, Indonesia is a very strong candidate to replace Thailand. The country is rich in natural resources and has a potential domestic market,” he told The Jakarta Post Wednesday.
He said the implementation of the AFTA, starting from Jan. 1 this year, had made automobiles and auto parts exports from Indonesia to other Southeast Asian countries easier.
However, he reminded the government to seek more investment in order to increase production and boost exports.
Recently, several automobile manufacturers announced their plans to invest in Indonesia.
Suzuki said the company was ready to invest Rp 4.2 trillion (US$470 million) to double its current production capacity to 170,000 units per year. Daihatsu will increase its production from the current 115,000-150,000 units per year with a total investment of Rp 4 trillion ($448 million)
A team comprising officials from the Investment Coordinating Board (BKPM) and the Industry Ministry has lobbied Korean manufacturer Hyundai to make Indonesia its production hub. The total investment expected from the company is $600 million. (rdf)