AHM to open 3rd plant in 2005

AHM to open 3rd plant in 2005

Leony Aurora, The Jakarta Post, Jakarta

Giant motorcycle producer PT Astra Honda Motor (AHM) plans to
spend up to US$200 million this year, particularly as it is
constructing its third plant in Bekasi, east of Jakarta.

The company would be spending between $150 million and $200
million to boost its motorcycle production and distribution,
finance director of publicly listed PT Astra International John
Slack said recently.

"About $100 million will be spent on building a new factory in
Cibitung (in Bekasi regency)," he said.

A joint venture between Japan's Honda Motor Co. Ltd. and Astra
last year began setting up a third motorcycle manufacturing plant
in Indonesia to take advantage of the growing motorcycle market.

"(With the construction of the plant) by the end of 2005 our
production will be probably exceed 2.6 million motorcycles in the
region," said Slack. "We'll increase our production to over three
million motorcycles in 2006."

Last year, AHM made a little over two million motorcycles from
the existing two plants located in Sunter and Pegangsaan, both in
Jakarta.

The new plant is expected to start production in October this
year, with an annual capacity of up to 1.2 million units.

Motorcycle sales in Indonesia have steadily grown in the last
couple of years after going down to less than half a million
units in 1998 from the 1.85 million units it recorded in pre-
crisis time of 1997.

With the economy growing at a faster pace, procedures to get
consumer loans simplified and lower interest rates applied,
motorcycle sales in Indonesia, the world's third largest market
for motorcycles, has been boosted further.

More people have started to choose motorcycles, especially due
to the lack of a good public transportation system and congested
roads in the country, after Chinese motorcycles, which are
relatively cheaper than Japanese ones, flooded the market in the
late 1990s.

The local market is estimated to have grown to about four
million units in 2004, according to the Ministry of Industry and
Trade, up from 3.3 million units in 2003.

Sales figure is estimated to jump even higher to about 4.9
million units this year.