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hinese firm Sany Heavy Industry Co., a subsidiary of machinery manufacturer Sany Group, has expressed interest in building a heavy equipment plant in Cikarang, West Java, with a total investment of up to US$200 million, an official says.

“The $200 million investment will be spent over a two-year period and will be adjusted with market conditions and the economy,” Industry Ministry international cooperation director general Agus Tjahjana told reporters on Monday.

He said Sunny had yet to apply for an investment permit with Investment Coordinating Board (BKPM), but the ministry would facilitate the application process so that the permit could be issued within one month after all required documents were submitted.

He said that the construction project could kick off within the next three months and was expected to be completed in 2012.

He added that the facility, to be located on a 10-hectare plot, would become the company’s production base for the ASEAN market.

“Based on its study, the firm can secure lower production costs by building the plant here rather than in other countries, such as Thailand or Malaysia, or even China,” he said.

According to Agus, the Indonesian domestic market alone was a source of potential demand for heavy equipment, such as excavators and bulldozers, because of the many agricultural, construction and mining activities.

The plant would absorb around 1,000 workers and annually produce 1,000 heavy equipment units for the ASEAN market. However, Agus did not provide details on when the planned plant would start commercial operations.

Agus estimated Sany would prioritize the objective of reaching 40-percent regional value content, as required by the ASEAN Free Trade Agreement. Under the agreement, products not entirely sourced domestically should fulfill at least 40 percent of the regional value content to be exempted from import duties.

“The firm will try to achieve the requirement to enter the ASEAN market. It can source components from other ASEAN countries to reach a combined 40 percent of the regional content,” he said, adding that Sany might also sell its products to other countries outside ASEAN, such as Japan and Australia.

The 40 percent requirement of regional content also serves to lift non-tariff barriers, such as anti-dumping duties and quotas for certain products.

Agus said that his ministry welcomed the establishment of the plant because it was a form of real, large-scale investment from China in the industrial sector outside the mining sector.

China was previously thought to be keen on cooperating on trade issues with Indonesia, with a particular interest in Indonesian natural resources and raw materials.

“We expect that the plant will also bring its component suppliers to Indonesia,” he said.

Sany Group is a global construction machinery company producing a wide range of machinery, including construction, road, excavation and pile driving machinery.

The firm’s manufacturing bases are currently located in the US, Germany, India and Brazil. Its sales revenue was valued at about 50 billion yuan (US$7.67 billion) in 2010. The company employs 53,000 workers in more than 120 countries.