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)