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ndonesia, the second-largest car market in Southeast Asia, expects to receive up to US$1.2 billion in foreign investment in the country's automotive component industry this year.

The Industry Ministry's director-general for high-technology priority industries, Budi Darmadi, said on Thursday in Jakarta that between 40 percent and 50 percent of the investments were expected to come from major car manufacturers such as Toyota, Honda and Suzuki, which plan to build car component manufacturing facilities in the country.

He said that the establishment of the car component factories would be part of the existing car makers' just-in-time delivery program. Under the program, automakers reduce inventory and avoid delays by getting the components transported just before they need them.

Most of the plants, slated to produce over 1,000 types of automobile components, would be located in eastern and western Jakarta, where automobile plants are mostly located, Budi said. Once the new facilities start operations, they would be able to hire 11,000 workers, he added.

Operations at the component factories would support the existing car manufacturing factories estimated to have absorbed investment amounting to more than $2 billion. The increase of car manufacturing facilities has attracted the flow of investments into component producers. Last year, at least 50 automobile component makers, including Japan's Denso International Asia Pte. Ltd., spent about $600 million to build factories in Indonesia, which are estimated to absorb 7,000 workers.

Toyota Motor Corp and its subsidiaries, Daihatsu Motor Co. and Ford Motor Co., which together have already attained more than half of the domestic market, are building new production facilities to fully benefit from the country's growing car market.

Other manufacturers, such as Ford Motor Co., General Motors Co., Honda Motor Co., Nissan Motor Co. and Suzuki Motor Co., are following suit to boost output and widen sales networks in the country home to more than 240 million people.

Analysts have said that the Indonesian car market, which hit the 1 million-mark last year, will continue to grow at least until the end of this decade thanks to the nation's rising middle-class.

From January-April this year, car sales, a key indicator of consumption in Southeast Asia's largest economy, totaled 389,108 units, up 17.8 percent from the same period last year. This year industry players are expecting sales to rise 10 percent to 1.2 million units.

Budi said automotive component makers would be eligible for tax incentives offered by the government as part of its program to support the production of more affordable and fuel-efficient cars.

Under the tax allowance scheme, component makers would see a taxable income reduction to 30 percent of its total investment carried over six years. They can also get duty payment exemptions on imported material.