Bimantara to supply Asia with Hyundai vehicles

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.