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Mitsubishi may invest US$1 billion in auto business

  • Linda Yulisman

    The Jakarta Post

Jakarta | Wed, September 10, 2014 | 11:45 am

Major Japanese trading house, the Mitsubishi Corporation, plans to invest up to US$1 billion in Indonesia to strengthen its automotive business, a minister has said.

The figure would be added to the $7 billion investment that Mitsubishi has poured into Indonesia between 2006 and 2014, including for the Donggi-Senoro liquefied natural gas (LNG) project in Banggai, Central Sulawesi, according to Industry Minister MS Hidayat.

'€œMitsubishi will launch its automotive project within the next two months,'€ he said Tuesday, declining to elaborate further.

The plan was revealed during a meeting between senior Mitsubishi executives, led by advisor Mikio Sasaki, and President Susilo Bambang Yudhoyono, together with president elect Joko '€œJokowi'€ Widodo.

The meeting was also attended by economic ministers, including Hidayat.

During the meeting, the firm also got the nod from Jokowi to realize its nickel project in Weda Bay, Halmahera, North Maluku, which it would jointly build with state-owned diversified miner PT Aneka Tambang (Antam).

The project will be developed through Singapore-based Strand Minerals Pte. Ltd., in which Mitsubishi is the second-largest shareholder after the France-based Eramet Group.

Mitsubishi, whose businesses range from finance to energy, earlier said it aimed to kick off its nickel mining and smelter development, totaling $5 billion, by the end of this year.

Mitsubishi runs its automotive business in Indonesia in collaboration with PT Krama Yudha Tiga Berlian Motors, which distributes passenger cars and commercial vehicles, made by the Mitsubishi Motor Corporation and Mitsubishi Fuso Truck and Bus Corporation (MFTBC).

Mitsubishi is now the fifth-largest seller of vehicles in Indonesia, with sales totaling 86,056 units from January to July this year.

Automotive industry players expect domestic car sales to reach 1.25 million this year, up only slightly from last year'€™s figure of 1.2 million, over concerns that high government interest rates will slow economic growth.

Global automakers, such as Toyota, Daihatsu and Nissan, have invested heavily in Southeast Asia'€™s largest economy, which they consider could serve as the next automotive hub in the region after Thailand.

Separately, the Industry Ministry'€™s director general for high-technology priority industries, Budi Darmadi, said the Mitsubishi investment would help the company achieve its longer-term plan to develop passenger cars.

'€œIt will enter assembling and also bring in component suppliers to support its operations,'€ he said.

Previously, Mitsubishi had expressed its interest in joining the government'€™s low-cost green car (LCGC) program, which exempts the 10 percent value-added tax from such vehicles.

However, the firm recently said that it would not take part in the program as it already produced the Mirage, a fuel-efficient car that is sold at an affordable price.

Mitsubishi will now focus on the multi-purpose segment and add its lineup to tap into the biggest segment in Indonesia'€™s car market, according to local media reports.

Krama Yudha marketing director Rizwan Alamsyah did not respond to The Jakarta Post'€™s inquiry to confirm the plan.

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