RI aims to make ASEAN region a car industry hub

Indonesia aims to lead the charge in making the Association of Southeast Asian Nations (ASEAN) an automotive industry production house, an official says.

"Now that we are the leader of the ASEAN automotive cooperative, we have the chance to shape the industry in the region," Edy Putra Irawady, a deputy to the minister for industry and trade, said Saturday in Jakarta during the 3rd Indonesia International Automotive Conference.

The cooperative set up in 2002 is hoped to make the ASEAN region a unified automotive industry production hub to strengthen the competitiveness of regional auto suppliers and build the ASEAN-made brand and automotive parts.

Four main supplying countries are the Philippines, Thailand, Indonesia and Malaysia. Only Malaysia has its own national car, while others produce for overseas brands.

Thailand and Indonesia host similar production centers for Toyota, Honda, BMW, Nissan, Ford and Suzuki.

In the cooperative, Indonesia also aims to develop component production for luxury cars, full production for cars with engine capacity under 1500 cc and car accessories, while other ASEAN member countries will produce other products.

"Basically it depends on Gaikindo (the Indonesian Automotive Industry Association) to develop a strategy for Indonesia. The government has given the guidelines; that is, industry activities that absorb a lot of manpower and are consumed widely -- basically not (only) luxury car production," he said.

However, he suggested the ASEAN-made brand should contain at least 40 percent of local elements of each consuming country.

"The goods are for local consumption, so we demand more local production content. Things that are already made in Indonesia cannot be imported, for instance," he said.

The position as the cooperative coordinator could also help Indonesia grow its local industries.

He said the bilateral trade agreements currently in effect with Japan, one of the main decision makers of the automotive industry in the region, would increase the production capacity in Indonesia.

Indonesia's large population has become a major car market in the ASEAN region. In 2008, vehicle sales are expected to top 500,000 units and production 520,000 units.

Budi Darmadi, the director general for the Industry of Transportation Equipment and Information Communication Technology said the government predicted an annual production of 1 million units by 2011.

source: Jakarta Post | July 2008