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Three East Asian Countries Committed to Investment in Indonesia

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By: Putu Prawira)*

President Jokowi’s working visit to a number of countries in East Asia some time ago has brought positive results. One of these results is the emergence of the commitment of automotive companies from Japan, South Korea and China to invest in Indonesia.

The Ministry of Industry (Kemenperin) said that currently there are 21 assembling industries for four-wheeled vehicles or more, with a total investment of Rp 139.36 trillion. The investment came from Japan amounting to Rp 116.1 trillion (83.31 percent). South Korea amounted to Rp 10.54 trillion (7.56 percent) and China amounted to Rp 11.3 trillion (8.11 percent). The rest is investment obtained from the European Union and domestically, amounting to Rp 1.42 trillion (1.02 percent).

The Minister of Industry (Menperin) RI Agus Gumiwang together with the Coordinating Minister for Economic Affairs (Coordinating Minister for the Economy), Airlangga Hartarto stated that for Japanese manufacturers, they managed to bag several brands to continue to increase investment in Indonesia.

The first investment commitment was successfully brought in from Mitsubishi Motor Company (MMC) amounting to Rp 10 trillion which will be realized in 2022 to 2025. Furthermore, the investment commitment has also come from Toyota Motor Corporation (TMC) which will add an investment of Rp 27.1 trillion for five years. next year (2022-2026).

In its official statement, Mitsubishi is committed to continuing to make Indonesia a production base for hybrid cars and increasing export markets, including expanding new export markets, from 30 to 39 countries, until 2024. This shows that the Indonesian government has succeeded in convincing industrial giants. automotive sector to invest in Indonesia.

In addition to the two manufacturers, investment also comes from Hyundai, which is an automotive factory from South Korea, they also have a factory in Karawang, West Java and have produced Creta and IONIQ.

In the first phase, Hyundai invested USD 750 million in Indonesia with a total production capacity of 150,000 units per year. The investment is used to produce 3,000 units of EV per year, and will be increased according to demand

Meanwhile, one of the Chinese brands that has expressed a commitment to invest is Chery Motor. The plan is that the investment will start running in 2022 with a total investment commitment of around USD 1 billion. Starting this year, Chery will gradually start producing SUV-type vehicles with a total of nine models, some of which are for export. Then, in four stages of development until 2028, the factory will produce nine models, with a proportion for the export market as well.

Chery International is also ready to disburse Rp. 14 trillion in Indonesia. The funds were used to build a production and manufacturing plant. It is stated that its production capacity reaches 200,000 units of cars per year.

In addition, Chery also has the intention to develop electric vehicles in Indonesia, because Indonesia is a country with the highest nickel reserves in the world. This also proves that Chery not only wants to invest, but also wants to take an important role in the development of the renewable energy vehicle industry.

For info, Chery Group was recorded to be able to score quite high sales growth this year. That is 12 percent, with a sales volume of 475,000 units of cars. This figure includes export sales of passenger cars, which amounted to 148,000 units, up 36 percent.

Furthermore, there are two other automotive companies from China that plan to produce EVs, namely PT SGMW Motor Indonesia (Wuling) with a production capacity of 10,000 units per year. It is known that Wuling has a 60 hectare factory in Cikarang, West Java with an investment value of Rp 9.3 trillion. And PT Sokonindo Automobile (DFSK) with a production capacity of 1,000 units per year.

Previously, President Joko Widodo (Jokowi) had said that investment in the automotive industry sector would be a priority to continue to grow. According to him, the automotive industry is one of the drivers of the Indonesian economy because it involves many domestic business actors from upstream to downstream as well as the involvement of micro, small and medium enterprises.

Jokowi also emphasized that there should be a transformation towards green technology. According to him, Indonesia has great potential to achieve this transformation. The existence of renewable energy-fueled vehicles will of course be able to reduce carbon dioxide emissions.

The automotive industry in Indonesia is able to show rapid development, investment commitments from Japan, South Korea and China must be maintained for the sake of developing investment and increasing Indonesia’s economic level on the world stage.

)* The author is a contributor to Pertiwi Institute

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