Sat, 25 Mar 2000

Bosowa to start motorbike production soon

JAKARTA (JP): Bosowa Group, a diversified business group based in Makassar, South Sulawesi, said on Friday it would start the commercial production of its motorcycle plant next month.

Aksa Mahmud, the president of the business group, said the company would cooperate with South Korean motorcycle producer Hyosung Motors & Machinery Inc. in motorbike production.

He said the company, which had spent about $20 million in investments for the motorcycle plant, was expected to produce about 10,000 motorcycles with engine sizes of between 50cc and 125cc this year.

The production capacity will be increased to 60,000 motorcycles next year to meet the expected bullish demand, he said, adding that the company would still import important parts for the motorcycles within the next few years.

"The local content of the motorcycles will be about 30 percent. But we are sure we will be able to compete with existing producers even though most of the components will still be imported," he said after the signing of a technical cooperation agreement with Hyosung.

The motorcycles, which will be produced at the company's assembly plant in Karawang, West Java, will be sold in the domestic market under the brand name of BSW. The new motorbikes will compete with several established names such as Honda, Yamaha, Kawasaki and Suzuki.

The prices of the Japanese motorcycles with an engine capacity of 100cc range between Rp 10 million and Rp 11.5 million at present.

"We will sell our motorcycles cheaper than the Japanese motorbikes," he said.

Indonesia's motorcycle market, the third largest after China and India, suffered a major setback in 1998 with the impact of the country's worst ever economic crisis. Total motorcycle sales in the domestic market, which reached 1.88 million in 1997, dropped to 430,948 motorcycles in 1998 due to the crisis.

The industry showed signs of recovery last year with total sales rising to 487,759 motorcycles, according to data provided by the Association of Indonesian Motorcycle Sole Agents and Manufacturers.

Monthly sales rose to 59,981 motorcycles in February from 40,498 in January.

Chairman of the association Gunadi Sindhunata said the country's motorcycle production was expected to increase to 700,000 motorcycles this year.

Indonesia still restricts imported motorcycles from entering the country to protect the local motorbike industry, which has so far invested about $400 million to develop their assembling operations. (07)