Japan’s top automaker Toyota Motor Corporation (TMC) has re-affirmed its commitment to Indonesia, saying it will invest up to Rp 13 trillion (US$1.35 billion) in the next five years for a number of expansion activities in Southeast Asia’s largest automobile market.
The largest amount of the investment will be used to more than double its production capacity and build a new engine factory to meet the fast-surging vehicle demand in the country of 240 million inhabitants. The sizeable investment will be spent to enhance the capacity of its first Karawang plant in West Java, to 130,000 units per year beginning September next year, from the present 110,000.
Toyota will also upgrade the capacity of its second Karawang plant, which is currently under construction, to 120,000 units by early 2014 from 70,000 units upon initial operations by March next year.
The two plants, to be operated by Toyota Motor Manufacturing Indonesia (TMMIN), its joint venture with Indonesia’s Astra International, will have a combined production capacity of 250,000 units by early 2014, the firm said in a statement. It means Toyota will double the capacity from the current 110,000 to 250,000 by 2014.
In line with the higher capacity, it will also increase its employment to around 41,000 workers in 2015 from roughly 32,000 workers at present, it said.
TMC president Akio Toyoda said on Saturday that this additional investment reaffirmed the group’s commitment to Indonesia’s prospective automotive industry.
“We’re glad to see the response from the Indonesian people and the government toward the achievement of Toyota in the past 40 years,” he said during a press conference in Jakarta.
Earlier in the day, Toyoda, who came along with executives of TMC and its related companies, met President Susilo Bambang Yudhoyono, who requested the firm’s support for the government’s move to develop low-cost and eco-friendly vehicles.
The multi-year investment of Rp 13 trillion planned by Toyota will also cover, among others, the expansion of Toyota Auto Body Corporation Ltd, which aims to create new models of vehicles for the Indonesian market, and Denso Corporation, which will build its third factory in Bekasi, West Java, to make high-technology components such as engine control units for local sales as well as exports, according to the firm’s statement.
Johnny Darmawan, TMMIN vice president and president director of Toyota Astra Motor (TAM), which tackles distribution and after-sale service for TMMIN cars, said that Toyota was currently finalizing the purchase of land totaling 150 hectares in Karawang, where a new engine factory was planned.
Apart from the Rp 13 trillion investment that had been approved, Toyota would likely pour another Rp 13 trillion to anticipate the fast-expanding automarket in Indonesia until 2020, Johnny said, but declined to elaborate details.
“The planned investment of Rp 13 trillion, and the Rp 13 trillion that will be soon realized, will be equal to Toyota’s overall investment for 40 years,” he told The Jakarta Post over the phone.