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T Toyota Motor Manufacturing Indonesia (TMMIN), the subsidiary of Japan'€™s auto-giant, the Toyota Motor Corporation, launched on Tuesday construction of a new Rp 2.3 trillion (US$197.17 million) engine plant to more than double its current production capacity.

During the initial phase, the firm will develop 20 hectares of its total 150-hectare area on the Karawang Jabar Industrial Estate in Karawang, West Java, according to TMMIN president director Masahiro Nonami.

Once operations commenced in early-2016, the new plant would produce 216,000 engines per year, half of which would be exported to destinations in Asia, South America and Africa, Nonami said.

'€œIt will allow Toyota Indonesia to gain a more significant position as it will become a global production base not only for vehicles but also engines,'€ he said during the launch ceremony, which was also attended by senior officials, including Industry Minister MS Hidayat and Investment Coordinating Board (BKPM) head Mahendra Siregar.

The new plant, which is using part of Toyota'€™s total investment of Rp 13 trillion in Indonesia through 2017, is the second engine-producing facility for TMMIN. Its first facility, which is located in Sunter, North Jakarta, manufactures 195,000 engines per year for Toyota'€™s international multipurpose vehicles: the Hilux pickup truck, the Innova minivan and the Fortuner sport utility vehicle (SUV).

Output at the Sunter plant is exported to a number of countries, including Argentina, India, Japan, Malaysia, the Philippines, South Africa, Taiwan, Thailand and Vietnam.

TMMIN now operates a total of four plants: the Karawang plants I and II at the Kawasan International Industrial City, which produce the Kijang Innova, Fortuner and Etios Valco hatchback, and the Sunter plants I and II in North Jakarta, which produce engines as well as carrying out a series of manufacturing processes, including stamping and iron casting.

TMMIN vice president director Warih Andang Tjahjono said along with the operation of the second plant, the firm aimed to increase locally sourced raw material from 60 to 80 percent. When Toyota first started producing engines at its Sunter plant in 1982, its local content totaled 12 percent, but the figure gradually rose to reach 60 percent when the firm launched its international multipurpose vehicles in 2004.

'€œLocalization, which is essential to enhance efficiency, will be supported by an increase in our local suppliers from 25 to 40 firms. The new suppliers will also build their own plants,'€ Warih said during a press conference after the ceremony. Apart from absorbing more local materials, TMMIN will also create 600 new jobs during the initial phase, adding to its existing 7,680 workers at its plants.

Investment by TMMIN, which is 95 percent owned by the Toyota Motor Corporation and 5 percent by Indonesia'€™s diversified group, PT Astra International, is part of the $4 billion automotive investment that the government expects to generate this year, up 8.1 percent from last year.

Hidayat said it was necessary to grow the domestic automotive industry by 13.5 percent this year, up from 10 percent in 2013.

He also said, on the sidelines of the ceremony, that part of the new investment would be supported by German automaker Volkswagen, which planned to build an assembly plant in Indonesia. However, he declined to elaborate on the details.

Indonesia has seen an automotive boom in recent years with sales hitting new record highs each year, driven by stronger purchasing power within the growing middle class.

Last year, car sales, which are an indication of domestic consumption, totaled 1.23 million, up 10 percent from 2012. This year, automakers are expecting sales to remain stagnant due to, among other things, rising interest rates.