Australian car companies seek RI business

By Russell Williamson

Indonesian vehicle manufacturers and component suppliers have a substantial list of Australian automotive companies wanting to supply products or develop joint venture operations as the local car industry primes itself for expansion.

According to the Australian Government's foreign trade department, Austrade, there are already 40 Australian automotive component manufacturers supplying the Indonesian industry and plenty more on the waiting list.

The automotive industry business manager for Austrade, Lynn Brown, said there were a further 75 companies hoping to do business because they viewed Indonesia's developing economy as offering great potential for their products and services.

"Indonesia's recent announcement that new players are entering their industry confirms this view that our near northern neighbor holds strong prospects for development as a major market for our products," Brown said.

"Even recognizing Indonesia's requirement for 60 percent local content in motor vehicles, there is still excellent potential for the Australian industry," he said.

Brown expects that once the Indonesian auto industry's development plans come to fruition, in about 2000, the local industry will be sourcing components from Australia worth more than US$150 million a year.

At the moment, most Australian components imported into Indonesia are sold as replacement parts or vehicle accessories. However, Brown said, the growing relationship between the two countries could see this trade develop much further.

"The level of contact over the past two years, and the increasing level of direct commercial relations, is creating a strong feeling of camaraderie between our two industries," Brown said.

"Future export activity from Australia will be increasingly devoted to sales of original equipment supplied through Australian joint venture companies. These components will be used for incorporation into motor vehicle assemblies with substantial Indonesian content," he said.

Brown said a number of trade missions between the two countries in recent years had raised the profile of the Australian industry in Indonesia and demonstrated its potential to supply local manufacturers.

Last year, a group of key Indonesian government officials and motor vehicle industry members visited Australia to attend a showcase of Australian automotive technology.

This was followed by a return visit by an Australian industry mission, which began a process of serious joint venture negotiations between a number of companies from both sides.

This process will be further enhanced during Indonesia's major motor show, AE '96, to be held in December this year. Nearly 20 Australian companies have already inquired about participating in the show.

As a result of this increased contact between the two countries motor industries, Brown said Indonesia was increasingly looking to Australia as a prime source of manufacturing and product technology, including tooling development and product research and development.

A number of Australian companies are already believed to be involved with the Maleo car project. The Maleo is the brainchild of Minister of Research and Technology B.J. Habibie and is expected to go into production about 1998 or 1999.

Brown said the growing trade relationship was not a one-way street and there were also opportunities developing for Indonesian companies to export to Australia.

"It is not just about Australia promoting and selling its products and services to Indonesia," Brown said.

"We are now part of a process that will lead to increased exports from Indonesia to Australia and which is bound to lead to eventual joint venture participation between companies from both countries looking for opportunities elsewhere in the Southeast Asian region," he said.