Hyundai Interested in Building a Factory in Indonesia

Tempo Interactive, Thursday, 30 September, 2010 | 17:17 WIB

TEMPO Interactive, Jakarta:Gita Wirjawan, the Investment Coordinating Board (BKPM) chairman, said Hyundai, the car producer from South Korea, had expressed its interest in building a car manufacturing factory in Indonesia. This is one of their investment plans brought up in a discussion with a number of companies in Korea last week.

Gita said the intention was in line with BKPM and the Trade Ministry’s program to promote car manufacturing in Indonesia. “We must accommodate it with a strong logistical basis,” Gita said yesterday. One of the ways was to re-manage logistical inter-modes like railway and roads.

The Korean car producer was very interested in investing in Indonesia because it does not have a manufacturing factory in Southeast Asia. In Indonesia, Hyundai only has one commercial vehicle assembling factory under PT Korindo Motors and another one for non-commercial vehicles.

Jongkie D. Sugiarto, PT Hyundai Mobil Indonesia president director said that because Hyundai does not have a manufacturing plant in the region,Hyundai cannot be exempted from duties, a policy implemented after the ASEAN free trade market. “That is why we are trying hard to offer Hyundai to build its manufacturing factory in Indonesia,” he told Tempo.

So far, Hyundai’s sedan, sports car, and multi-purpose vehicles are subject to a 45 to 60 percent duty. Therefore, the price of Hyundai cars had never been competitive since the beginning, compared to cars getting those facilities.

According to Jongkie, however, the construction of the car manufacturing plant, still depends a lot on improvement of the investment climate. Some investment barriers that must be resolved include the licensing, infrastructure, and political stability.

Gita further said that he was certain that within the next three years, Korea’s investments can reach US$ 10 billion. The target was set following a meeting with many companies there. “They see Indonesia in a positive way,” he said.

A few companies which have invested in Indonesia include a steel company from South Korea, Posco, which has established a joint-venture together with PT Krakatau Steel. In the near future, Hancook tire factory will also invest in Indonesia by building a plant. “Posco is to confirm it will perform a stone-laying ceremony this October,” Gita said.

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