Astra, LG to up investment for business expansion

The Jakarta Post, Jakarta

Japanese car manufacturers Toyota Motor Corp. and Daihatsu Motor Co. Ltd. and Korean electronics producer LG Electronics Inc. plan to increase the production capacity of their Indonesian plants by upgrading their investments, a minister says.

"The two car manufacturers, through PT Astra Daihatsu Motor (ADM), will invest US$70 million by December 2005 to increase production capacity," Minister of Industry Andung Nitimihardja said on Thursday.

ADM has invested $10 million in the first phase of the expansion of its plant in Sunter, North Jakarta. With the expansion, the plant will have an annual production capacity of 114,000 units and will employ 700 more people.

After the second phase of the expansion, scheduled for December 2005 through March 2007, the plant will be able to produce 150,000 units annually and will employ an additional 1,500 people.

The company is currently operating with a workforce of 4,500.

The planned expansion, Andung said, was a response to growing market demand for 1,000 cc and 1,500 cc vehicles.

ADM exports 3,200 units of completely knocked down Avanza to Malaysia each month and hopes to increase this figure to 4,500 units per month.

The Avanza is a joint project between Daihatsu and Toyota, through its vehicle Xenia. It was introduced in 2003 to the Indonesian market to meet demand for affordable multipurpose vehicles.

ADM also plans to export between 600 and 800 completely built up cars, both the Avanza and Xenia, to South Africa, Mexico and the Philippines.

"We hope the investment will have a multiplier effect on supporting industries," Andung said.

He added that the long-term investment showed the country's business climate had improved.

Andung also mentioned another planned investment of $15 million by Korean electronics manufacturer LG, through its local arm PT LG Electronics Indonesia.

He said LG planned to increase the annual production capacity of its refrigerator plant in Tangerang, west of Jakarta, from 840,000 units to 1.6 million units.

However, the company is first seeking improvement in the country's infrastructure.