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Mitsubishi to spend $600m on car factory in Bekasi
Mitsubishi Motors, a subsidiary of Japanese trading giant Mitsubishi Corp
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M
itsubishi Motors, a subsidiary of Japanese trading giant Mitsubishi Corp., will invest US$600 million to build a multi-purpose vehicle (MPV) factory in Bekasi, West Java, that will supply both domestic and overseas markets against the backdrop of strong demand here.
Mitsubishi Motors CEO Osamu Masuko said on Tuesday that the assembly plant was expected to start production in 2017, while first-term construction would begin in May next year.
The plant would eventually have the capacity to produce 240,000 vehicles per year, but during the first phase of construction its output would not exceed 160,000 vehicles per year.
'The factory will manufacture a particular type of MPV that is not produced in Japan,' Masuko told reporters at the Industry Ministry in Jakarta.
The factory was also expected to export 20,000 MPVs per year to other countries in Southeast Asia, mainly Thailand, the Philippines and Vietnam, according to him.
Indonesia was seen as having huge potential for automotive investment due to its population of more than 240 million, with a growing middle class and a high productive-age population, said Masuko.
The country 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, automotive industry players expect domestic car sales to remain around last year's level as the high interest rate environment might affect people's buying mood and slow down the economy.
Global automakers, such as Toyota, Daihatsu and Nissan, have invested heavily in Southeast Asia's largest economy, which they believe could serve as the next automotive hub in the region, taking the crown from Thailand.
- Plant will supply both domestic and overseas markets
- It will produce up to 240,000 vehicles per year and add 2,800 jobs
- RI seen as next automotive hub in the region
'Indonesia was selected by Mitsubishi Motors to be its next exporter because its factory in Australia will be closed in two years,' said Budi Darmadi, director general for high-technology priority industry at the Industry Ministry.
Mitsubishi Motors is currently manufacturing commercial vehicles at a 160,000-unit capacity plant in Pulo Gadung, East Jakarta, owned by Mitsubishi Corp. and local partners, according to Budi.
He expects the new plant to offer new 2,800 jobs. Mitsubishi Motors currently employs 4,000 people at its Pulo Gadung plant.
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 Corp. and Mitsubishi Fuso Truck and Bus Corporation (MFTBC).
Mitsubishi is now the fifth-largest vehicle seller in Indonesia, with sales totaling 86,056 units from January through July this year.
The company's plan to expand its automotive business in Indonesia with the new plant would be an addition to the $7 billion it 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.
The plan was revealed during a recent meeting between senior Mitsubishi executives, led by advisor Mikio Sasaki, and President Susilo Bambang Yudhoyono, together with president-elect Joko 'Jokowi' Widodo and other economic ministers. (gda)
