Bimantara to supply Asia with Hyundai vehicles

By Russell Williamson

PT BIMANTARA Cakra Nusa could soon become the sole supplier of right-hand drive Hyundai vehicles in the Asian region.

The company, a wholly owned subsidiary of PT Bimantara Citra headed by Bambang Trihatmodjo, President Soeharto's son, already assembles the Hyundai Elantra and will add the smaller 1500cc Accent to its range next month.

Both cars will be launched next month with Indonesian branding and names and will be known as the Bimantara Nenggala (Elantra) and the Bimantara Cakra (Accent).

While they will be assembled locally from completely knocked down packs imported from South Korea, the President Director of PT Bimantara Cakra Nusa, Jongkie Sugiarto, said the company is to build a full manufacturing facility with the aim of starting commercial production by the end of 1998.

Jongkie said Hyundai Motor Company (HMC) in South Korea had confirmed that Indonesia would be its sole manufacturing facility in the South-East Asian region, producing cars for both domestic use and export within the region.

"It has been decided by the Hyundai Group and Chairman Chung Se-yung when he was here and when we went to Korea that Indonesia is their base for South East Asia, not Thailand, not the Philippines and not Malaysia," Jongkie said.

"We plan to set up a factory - manufacturing not assembly - with Hyundai, about 60km east of Jakarta with an initial capacity of about 100,000 units a year.

"We plan to start the construction this year. It should be finished by the third quarter of 1998 with commercial production beginning at the end of 1998."

He said the initial investment in the plant would be in the region of about $US400 million, rising to $US700 million over the next few years.

Of the 100,000 units expected to come out of the factory, at least 50 per cent will be for export in both completely knocked down and completely built up forms.

Jongkie said Bimantara was hoping to get the approval from HMC to supply all right-hand drive markets in the region, including Thailand, Singapore, Malaysia, Brunei, Australia and New Zealand.

"At the beginning it will be more domestic but as soon as we have the opportunity to export, Hyundai says no problem," Jongkie confirmed.

"We may have the opportunity to supply the right hand drive countries in the region out of that factory because HMC says it would be better to concentrate on left hand drive production in Ulsan."

He said he had already convinced HMC to establish an engine manufacturing plant with a capacity of 200,000 units a year to be used in locally manufactured Hyundai cars for export and exported back to Korea.

In addition to the full manufacturing facilities, Jongkie said a number of Hyundai's South Korean original equipment suppliers were also looking at establishing manufacturing facilities in Indonesia to assist in the production of the local and export cars.

He said Bimantara was close to finalizing negotiations with 12 original equipment suppliers to set up operations in Indonesia.

The attractions of Indonesia for the South Korean component suppliers, according to Jonkie, are the lower production costs and the opportunity to export.

"They can expand the business or the capacity in their country. They do have the money and the demand is there," Jongkie said.

"For example bumper manufacturers say they have to expand their capacity but they are aware that in five to seven years their production costs will be high - at the same level of Japan - and they will not be able to sell their products anymore, especially for export.

"Therefore they are now looking to have a base in Indonesia as HMC has already decided to have a base here for South East Asia."

Jongkie said the establishment of local component suppliers also had benefits for Bimantara's local vehicles as it would enable the company to accelerate its local content and achieve the requirements of the national car policy.

Although the Government has continually refused to grant the same tax concessions to Bimantara as those benefiting PT Timor, the company is to continue to try to meet the requirements and request the tax concessions.

He said Bimantara was already meeting two of the three requirements, with the Indonesian company ownership and the imminent local branding and was close to meeting local content stipulations.