Monday, 01 August 2022 11:22

Ministry of Industry Encourages a Number of Automotive Manufacturers to Increase Investment in Indonesia

The automotive industry plays an important role in supporting Indonesia's economic growth. To date, there are 21 players in the assembly industry of four-wheeled vehicles or more with a total investment of Rp 139.36 trillion. The investment came from Japan of IDR 116.1 trillion (83.31%), followed by South Korea of IDR 10.54 trillion (7.56%), and China of IDR 11.3 trillion (8.11%). The rest is investment from the European Union and domestically, amounting to RP 1.42 trillion (1.02 %). In the results of the visit of the Minister of Industry Agus Gumiwang Kartasasmita to Japan accompanying the Coordinating Minister for Economic Affairs Airlangga Hartarto, the government succeeded in holding the commitment of automotive companies to continue to increase investment in Indonesia. From the results of the meeting between the Coordinating Minister for the Economy and the Minister of Industry with the leaders of automotive companies in Japan, an investment commitment from Mitsubishi Motor Company (MMC) of IDR 10 trillion was obtained which will be realized from 2022 to 2025. Furthermore, Toyota Motor Corporation (TMC) will add an investment of IDR 27.1 trillion for the next five years (2022-2026). "Mitsubishi continues to realize its commitment to make Indonesia one of the hybrid car production bases and increase the export market, including expanding new export markets, from 30 to 39 countries until 2024," said Agus in a press release on the Ministry of Industry website, Friday (29/7).
 
The Ministry of Industry appreciated and supported the realization of this commitment and conveyed some hopes to Mitsubishi. Among them are to accelerate the Vehicle Production Program for Battery-Based KBL technology or EV key cars in Indonesia and to export SUV-type vehicles from Indonesia to the Australian market within the next one year. To Toyota, the Minister of Industry expressed the hope that the manufacturer would support efforts to increase the use of local Indonesian components. "We also ask these industry players to increase the use of local Indonesian components, especially components from Small and Medium-sized Industries (IKM). We also conveyed this at the automotive industry business forum in Japan, last June," said Agus. Apart from Japan, automotive players from South Korea also continue to increase their investment in Indonesia. A South Korean vehicle company, Hyundai, has started mass-producing vehicles for B-SUV, MPV, and EV SUV products at the Cikarang factory, West Java, since January 2022. Hyundai has also launched the IONIQ 5, the plant's first electric vehicle produced in March 2022. In the first phase, Hyundai invested US$ 750 million in Indonesia with a total production capacity of 150,000 units per year, of which is currently used to produce 3000 units of EVs per year and will be increased according to demand. At this time, the government is also exploring the investment plan of an automotive company from China, namely Chery Motor. 
Chery has met several times with the Minister of Industry to discuss investment plans that will start running in 2022 with a total investment commitment of around US$ 1 billion. In 2022, Chery will gradually begin to produce SUV-type vehicles with a total of nine models and among them for export needs. Furthermore, PT. Chery Motors Indonesia will carry out four stages of investment until 2028. "In 2022, Chery will start producing SUV-type vehicles. Then, in four stages of development until 2028, the factory will produce nine models, with proportions for the export market as well," explained Agus. He added that Chery had conducted intensive communication with the Ministry of Industry and expressed its commitment to make Indonesia an ASEAN hub and part of the company's global exports. Furthermore, there are two other automotive companies from China that plan to produce EVs, namely PT SGMW Motor Indonesia (Wuling) with a production capacity of 10,000 units per year and PT Sokonindo Automobile with a production capacity of 1,000 units per year. The Ministry of Industry also welcomed the investment of automotive industry players, including those who developed the electric vehicle business. "We fully support the development of an electric vehicle ecosystem from upstream to downstream to make Indonesia a leader in the production of electric vehicles that are globally competitive," said the Minister of Industry. Agus revealed that there are many investors who submit proposals to contribute to the development of the electric vehicle ecosystem in Indonesia, including the EV battery manufacturing industry. One of them is a consortium consisting of Hyundai Motor Company, KIA Corporation, Hyundai Mobis, LG Energy Solution, and Indonesia Battery Corporation (IBC). In addition, contemporary brunp company Lygend Co., Ltd. (CBL) together with PT Aneka Tambang Tbk, and IBC also collaborated to carry out EV battery integration projects, ranging from nickel mining and processing, EV battery products, EV battery production, and battery recycling with a total investment in phase I of around US$ 6 billion.
 
The Ministry of Industry continues to spur the development of the automotive industry towards environmentally friendly vehicles as regulated in Presidential Regulation Number 55 of 2019 concerning the Acceleration of the Battery Electric Vehicle Program for Road Transportation, and Government Regulation Number 74 of 2021 concerning Sales Tax on Luxury Goods (PPnBM) of Motor Vehicles. Efforts to accelerate the use of electric vehicles are also strengthened by the implementation of PPnBM tariffs for vehicles with zero emission technology such as Battery Electric Vehicle (BEV) and Domestically produced Fuel Cell Electric Vehicle (FCEV) which will be given at 0%. The national automotive industry is currently supported by 21 industrial companies of four-wheeled motor vehicles or more, with a production capacity of 2.35 million units per year. The national automotive industry absorbs 38,000 workers and involves more than 1.5 million workers along the industrial value chain, including in the IKM component sector, this industrial subsector has a forward linkage value of Rp 35 trillion and a backward linkage value of Rp 43 trillion. The export market share of Indonesian automotive products has penetrated more than 80 countries with export performance in 2021 reaching 294,000 units of CBU vehicles with a value of IDR 52.90 trillion, 91,000 sets of CKD with a value of IDR 1.31 trillion, and 85 million pieces of components with a value of IDR 29.13 trillion. In the first quarter of 2022, the transportation equipment industry experienced the highest growth among other processing industry subsectors, with an achievement of 14.2% year on year (yoy)

 

 

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