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INKA to open new factory amid mounting orders
State-owned train maker PT Industri Kereta Api (INKA) plans to build a new factory this year in a bid to increase its production capacity amid the fast pace of the government’s infrastructure development
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tate-owned train maker PT Industri Kereta Api (INKA) plans to build a new factory this year in a bid to increase its production capacity amid the fast pace of the government’s infrastructure development.
The firm currently has one factory located in Madiun, East Java, with a capacity of 400 units of various types of railcars per year.
It expects to scale up the capacity to 700 car units per year after the new factory is constructed, to better cater to the domestic as well as the export market.
The company is now seeking a suitable site to build the factory, which is targeted for completion next year. It would prefer somewhere in East Java, such as Banyuwangi or Probolinggo, as the new factory’s base.
“[The proposed location] is still being assessed,” INKA president director R. Agus H. Purnomo told journalists after signing a syndicated loan agreement with state lender Bank Mandiri and state-owned infrastructure financing firm PT Sarana Multi Infrastruktur (SMI) on Friday.
“What’s important is that the location should be near a port and have access to the railway, so that it will be easier for us if we have to send the cars overseas.”
He expressed optimism that it would be able to build the factory this year and roll out operations next year, despite the narrow window of time.
The firm has allocated Rp 600 billion (US$45.07 million) of funds to build the new factory, using money from a state capital injection (PMN) allocated by the government in last year’s state budget.
INKA received Rp 1 trillion of PMN in total last year.
“We need up to Rp 7 trillion worth of working capital to fund various projects and they will be financed using banking facilities, MTN [medium term notes] as well as the government’s financing scheme, such as the NIA [national interest account],” INKA finance director Mohammad Nur Sodiq told reporters.
The NIA is a government policy introduced in the first economic stimulus package last year to push penetration to non-traditional export destinations that, despite being commercially non-viable, may help boost shipments.
INKA is working on the production of 50 broad-gauge and 200 meter-gauge passenger cars worth almost $100 million, to be exported to Bangladesh using the NIA scheme.
It shipped 150 cars to the South Asian country last year.
Other than Bangladesh, INKA has also received orders from African countries, including Zambia, Senegal, Egypt and Ethiopia.
Meanwhile, domestically, the firm is now producing cars for the Jakarta and West Sumatra airport trains and light rail transit (LRT) in Palembang, South Sumatra.
“I have to admit that the government’s program to build more railway infrastructure bodes well for our financial performance,” Sodiq said.
President Joko “Jokowi” Widodo’s administration aims to build more than 3,000 kilometers of rail track by the end of its term in 2019 to help connect the country and boost the economy.
The firm is now also manufacturing 438 cars ordered by state-owned train operator PT Kereta Api Indonesia (KAI) as part of the first phase of its revitalization project, which aims to replace 1,000 cars by 2019.
The project’s value amounts to Rp 2.3 trillion, Sodiq said. As much as Rp 1.69 trillion of this is generated from the syndicated loan signed on Friday, while the remainder will come from the firm’s internal cash.
