Astra, Komatsu to form leasing firm

The Jakarta Post, Jakarta

The country's largest automotive company, PT Astra International, plans to set up a joint venture leasing company with Japan's heavy-equipment maker Komatsu Ltd. later this year, according to Astra's top official.

Astra International president Budhi Setiadharma was quoted by detik.com as saying on Thursday that the new venture would focus on providing financing for the purchase of Komatsu's heavy-equipment products.

The multi-finance company would allocate some US$20 million for initial investment, he said.

Astra, via its publicly listed heavy equipment division PT United Tractors, owns a 5 percent stake in PT Komatsu Indonesia, the local unit of Japan's Komatsu, which has the largest share of the heavy-equipment market in the country.

Komatsu Indonesia is expected to enjoy strong sales this year amid the strong demand for heavy equipment from mining, logging, and agricultural companies.

The company's spokesperson said in September that sales were expected to grow by around 78 percent to at least 1,400 units this year, compared to 786 units last year.

Resource-based companies have launched expansion programs to take advantage of the current surge in the prices of their commodities. The move is raising demand for heavy equipment.

Komatsu Indonesia expects mining companies to account for 51 percent of the total equipment demand this year, followed by logging companies with 22 percent, agricultural companies with 10 percent, and construction companies with 17 percent.

Total domestic demand for construction equipment this year was expected to reach 4,180 units, with Komatsu expected to account for 39.8 percent of the market share, followed by Caterpillar and Hitachi with 29.1 percent and 15.6 percent respectively, said Petra.

Komatsu is likely also to benefit from higher demand in the construction business next year as the country's new government will boost public works.