Auto industry told to upgrade

The Jakarta Post, Jakarta

Over the past five years the local automotive industry has grown fast, and this is expected to prompt industry players to start focusing on their ability to fully design and engineer motorcycles by 2009, as well as increase the use of local content in cars.

A senior Ministry of Industry official Agus Tjahajana said on Monday that assemblers and their supporting industries, which are mostly small and medium enterprises, must work together to build up their competencies in automotive engineering and technology.

"As for the government, we will encourage industry players to boost their research and development divisions and provide incentives for them," he said on the sidelines of a seminar on the development of automotive components industry in Indonesia.

"When investors ask the government about what kind of incentive we can give them, the answer is actually the country's big market. Security, among other things, is the real problem for investors," he added.

PT Astra Otoparts Tbk president director Budi S. Pranoto said that the component industry should focus on engineering and technology.

"If we only rely on manpower, we won't be competitive enough compared to other countries such as China and Vietnam," he said. "Therefore, we must involve academicians and the government in developing the technology."

Astra Otoparts held the seminar to coincide with a two-day exhibition of its 28 subsidiaries on their progress in the component industry.

A total of 483,000 cars and nearly 4.1 million motorcycles were sold last year. This year the automotive industry expects to sell 520,000 cars and five million motorcycles.

The targets may even be surpassed, considering that for the car market alone the Association of Indonesian Automotive Manufacturers (Gaikindo) has recorded sales of 143,986 units.

"The fact that Indonesia is the third biggest market for motorcycles after China and India shows that we can penetrate Asian markets with self-made components," Budi said.

He added that the government should set up national standards for component industry.

"By having standards, we will eventually improve the quality of our components."