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.