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Govt asks carmakers to keep chips coming to Indonesia
Industry Minister Agus Gumiwang said on Wednesday that the government had made several trips to Japan, which is home to numerous car brands that dominate production in Indonesia, asking the headquarters of each carmaker to ensure the flow of semiconductors to Indonesia ahead of their other markets.
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he government has asked global carmakers to prioritize their Indonesian factories for the supply of semiconductors as a chip shortage is hampering automotive production around the world.
Industry Minister Agus Gumiwang said on Wednesday that the government had made several trips to Japan, which is home to numerous car brands that dominate production in Indonesia, asking the headquarters of each carmaker to ensure the flow of semiconductors to Indonesia ahead of their other markets.
The government previously reached out to many countries, including Germany and the United States, in the hope of building domestic industries to eventually produce chips locally.
President Joko “Jokowi” Widodo announced in January the government’s intention to develop the ecosystem for the semiconductor industry this year. Relatively low geopolitical risk has been identified as a competitive advantage that might draw investors to Indonesia.
Read also: Indonesia wants in on chip industry and has some things going for it
With semiconductors hard to come by and trade of other components also disrupted, supplies for vehicles produced by Indonesia’s auto industry had become limited at a time when consumer demand for cars remained strong, Agus said.
“I want to make sure that their principals will prioritize semiconductors for their production in Indonesia, [so that] semiconductors from producers like Mitsubishi, Toyota and others will not go to factories outside Indonesia,” Agus told reporters at the Office of the Coordinating Economic Minister.
“This is because many countries are scrambling [for microchips],” he added.
Read also: Global chip crunch stunts Indonesia car sales recovery
Securing semiconductors for domestic industries has been a priority for many governments over the last two years as chip producers were unable to meet a surge in demand for the manufacture of electronics and cars.
Concern about the global semiconductor supply has risen amid a spike in geopolitical tensions between China and the United States following US House Speaker Nancy Pelosi’s visit to Taiwan.
Coordinating Economic Minister Airlangga Hartarto told reporters on Friday that he expected the brewing geopolitical conflict to lead to a trade war affecting supply chains, given that Taiwan was the world’s leading semiconductor producer and had for years supplied industries in Mainland China.
“Of course, the interest of Western countries is that they do not want the semiconductor supply to get disrupted. This is a [crucial] commodity in the digital era,” Airlangga said.
Read also: Indonesians wait for motorbikes as chip crunch hits home
Anton Jimmy Suwandi, Marketing Director at PT Toyota Astra Motor (TAM), said on Wednesday that a prolonged semiconductor shortage was affecting the company’s production of cars, including electric vehicles.
However, Anton said, carmakers were still able to maintain output and sales and even achieved significant growth from last year.
He added that some carmakers, like Toyota, were mostly assembled from locally sourced parts, leaving them less affected by global supply disruption.
Car wholesales reached 475,321 units in the first six months of this year, up 20 percent from the corresponding period of last year, according to data from the Association of Indonesian Automotive Manufacturers (Gaikindo).
“So far, I see no slowdown in sales. The car market is still growing, including for Toyota. I hope this trend remains stable,” Anton said.
