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riven by an automotive boom and rising demand for heavy equipment in Indonesia, Japanese firms are planning to build plants and expand business in Southeast Asia’s largest economy.

Executives of the Jakarta-Japan Club, including Toyota Motor Manufacturing Indonesia vice president Mamoru Akiyama and Honda Prospect Motor director Yoshinobu Hara, discussed their component supply plans at a meeting with Industry Minister MS Hidayat here on Tuesday.

Speaking after the meeting, Industry Ministry high-technology priority industries chief Budi Darmadi said that around 50 Japanese automotive component makers would build plants in Indonesia this year at a cost of US$700 million, part of $2.4 billion planned investment by overseas manufacturers unveiled last year.

The component plants, which can be built faster than automobile plants, would begin production this year of a wide range of components, such as bumpers and gensets, to global firms such as Toyota and Honda, Budi said.

“A manufacturer may provide two or three products to more than one brand,” Budi said, adding that some Japanese producers would team up with local partners. The plants would be built near Cilegon, Banten or Cikampek in West Java where most local automobile assembling plants were located, Budi said.

Indonesia, currently Southeast Asia’s second-biggest automobile market, has attracted sizeable automotive investment from major global manufacturers. Around half of the nation’s 240 million inhabitants are in the middle class, making Indonesia a booming market for car sales, an indicator of consumption.

Japan’s top auto maker, Toyota Motor Corporation, wants to boost capacity of its two plants in Karawang, West Java, to 250,000 units by early 2014 and is planning to invest Rp 13 trillion ($1.35 billion) for its expansion plans over the next four years.

Another Japanese automaker, Honda Motor Company, Ltd. is building a plant that will triple its local annual production capacity to 180,000 cars by the first quarter of 2014. The plant, located in the Mitrakarawang Industrial Estate in Karawang, West Java, had a price tag of Rp 3.1 trillion.

Car sales reached an all-time high of 1.12 million in 2012, up 24.83 percent from 2011, driven by robust demand, particularly from the middle class. This year, the local industry wants to sell 1.2 million units, which would be up 7.5 percent from last year’s figure.

Meanwhile, Budi said that Hitachi Construction Machinery Co., Ltd., Japan’s second-biggest excavator maker, wanted to expand into the Indonesian market.

“We tell them we have a high demand for heavy equipment and also equipment for high-voltage power distribution and transmission,” Budi said. Hitachi would likely expand locally market by producing power generation equipment, such as gas-insulated circuit breakers and steam turbines, he said.