Bakrie also required to export its cars
JAKARTA (JP): The Investment Coordinating Board has licensed PT Bakrie Motor, a subsidiary of the Bakrie Group, to produce both passenger and commercial vehicles domestically.
In a letter dated Nov. 15, the board's chairman Sanyoto Sastrowardoyo, who is also state minister of investment, required Bakrie Motor to export 20 percent of its planned output of 25,000 vehicles per annum.
The value of its exports is projected to reach $65 million per annum.
The Bakrie-car project is expected to cost Rp 290 billion (US$122.6 million), with Rp 100 billion coming from equity and the remaining Rp 190 from loans.
With such an investment, Bakrie Motor will also manufacture 26,250 car bodies and 5,000 chassis for their own use.
The remaining components, including engines, will be sourced from both foreign and domestic auto part manufacturers.
Bakrie Motor will import completely built-up engines from Peugeot-Citroen Moteur for its vehicles. In addition, it has asked PT Bakrie Tosan, another unit of the Bakrie Group, to manufacture brake systems.
Other components will be ordered from local independent companies, including PT Dasa Windu Agung, PT Kayaba, PT Nippon Denso Indonesia, PT Inou Rubber and PT Bridgestone Tire Indonesia.
The chairman of the Bakrie Group, Aburizal Bakrie, has said Bakrie vehicles will have no less than 40 percent local content in the first year of production, which is expected at the end of next year.
The local content will be raised to 50 percent in the second year and to 60 percent in the third year under the weighting system set by the government.
If the Bakrie vehicles are recognized as having 60 percent local content, they will have the right to enjoy tax breaks from the government.
Without such tax facilities, Bakrie vehicles will be sold for between Rp 38 million (US$16,060) and Rp 60 million, depending on the specifications requested by buyers.
Bakrie will produce cars of three engine types, namely 8- valve, 1,900cc engine; 16-valve, 2,000cc engine; and 2,000cc turbo intercooler engine.
The Investment Coordinating Board has given Bakrie Motors opportunities to diversify its product lines into producing other auto components. (rid)