Astra International plans huge investment
Astra International plans huge investment
JAKARTA (JP): Astra International, Indonesia's largest automotive assembler, plans to invest about Rp 3 trillion (US$1.3 billion) over the next five years in anticipation of tougher competition in the country's automotive vehicle market.
T. Permadi Rachmat, the company's president, said yesterday that the massive investment program would concentrate on automobile and motorcycle manufacturing.
"This is part of our business strategy to anticipate the free competition era in the ASEAN market," he told journalists after the annual shareholders' meeting of the company, which has widely diversified its businesses.
Member-countries of the Association of Southeast Asian Nations (ASEAN) -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- are committed to trade liberalization among themselves by 2003.
Rachmat said that Astra's business strategy included the establishment of manufacturing units in other developing countries.
One of the planned overseas units will soon be established in Vietnam in cooperation with Daihatsu of Japan and local partners.
"The agreement on the establishment of the joint venture was signed last week," he said, adding that the joint venture, with an initial investment of about US$35 million, was designed to produce about 3,000 vehicles per year.
The joint venture, which is 26 percent owned by Astra, 31 percent by Daihatsu and another 43 percent by Vietnamese partners, is expected to contribute significantly to the growth of Astra's future earnings.
Growth
Rachmat said that Astra, which controls about 55 percent of the domestic automobile market, is projected to book steady growth in its sales this year even though the recent surge in the Japanese yen would cause a rise in prices of between 12 and 15 percent.
Astra, a publicly-listed business group which operates about 200 subsidiaries and employs some 83,000 people, booked an increase of almost 100 percent in its net earnings in the first quarter of this year to Rp 92.5 billion, as compared with Rp 47.26 billion gained in the same period of last year.
According to its 1994 consolidated financial reports, its net profit rose by around 110 percent to over Rp 279 billion (US$126.8 million) in 1994 from Rp 132.37 billion in 1993.
The earnings per share of the group, which is listed on Jakarta and Surabaya stock exchanges, rose by over 100 percent to Rp 247 per share in 1994 from Rp 137 in 1993 as a result of the higher profits.
Yesterday's meeting approved a proposal to pay a cash dividend of Rp 80 per share.
Astra's consolidated net sales rose by 51 percent to Rp 8.88 trillion (around $4 billion) from Rp 5.88 trillion a year earlier, while net revenues of its financial subsidiaries rose to Rp 621.1 billion from Rp 537.1 billion.
Rachmat said Astra, which is also engaged in financial services, the wood-based industry, agribusiness, electronics and heavy equipment, should give place greater emphasis on its core business to enable it to compete with car producers from other ASEAN countries.
He did not name Astra's potential competitors but car analysts said yesterday the competition would come from non-Japanese car assemblers in Europe, the United States and other Asian countries, which have apparently developed a stronger presence to strengthen their market foothold in most of ASEAN countries.
Hyundai and KIA, two major South Korean automobile producers, for example, are now working to establish manufacturing units in Indonesia as their production bases in the region.
Analysts said that the continued surge in the value of the yen would give non-Japanese producers a stronger competitive edge against Astra, which mainly assembles Toyota and Daihatsu vehicles.
The annual shareholders' meeting, which was also attended by chief commissioner A.R. Ramly, a former Indonesian ambassador to the United States, and vice chief commissioner Winarto Soemarto, who is also the president of the state-owned Bank Negara Indonesia (BNI), endorsed the group's 1994 balance sheet. (hen)