Component industry development vital: Gaikindo
By Matthew Allen
GAIKINDO, the Association of Indonesia's Automotive Industries, has called upon the government to help create a positive economic climate for the development of Indonesia's components industry.
It claims that without a viable supplier industry capable of producing components in volume the car industry's progress will be stunted.
The chairman of Gaikindo, Mr Herman Latief, said that the growth of the supporting industries in Indonesia was lagging behind.
He said a key reason behind the government's national car program was to enhance the development of the supporting industries.
However, the national car program requires volume sales for the supporting industries to survive.
"You need volume to push certain segments in the supporting industries," Herman said.
"The main priority issue in the automotive industry whether it be Mitsubishi or Toyota is the supporting industries.
"In Indonesia we have only 91 supporting companies plus their suppliers and that is only 119.
"Normally one car maker has hundreds of supporting companies.
"Even for the first layer of supporting companies you need thousands of second layer supporting companies."
Thailand has around 350 supporting companies, Malaysia around 250, the Philippines 191.
"We are behind and we must catch up," Herman said.
Car-makers are responsible for between 30 to 40 per cent of the in-house content of their vehicles while the remainder must be sourced from out-house companies.
However, Herman said in order for these companies to want to invest in large scale volume production they needed to be guaranteed volume sales.
Herman, who is also the vice president of PT Krama Yudha Tiga Berlian Motors, the sole distributor of Mitsubishi Motors in Indonesia, said that his company will continue to concentrate its investment on its in-house components.
"There is confidence for our investment in the in-house suppliers, but for the out-house it is just not efficient for us to invest in everything.
"If the supplier companies can supply us with quality cost delivery (QCD) there is no problem we will purchase that product."
The general manager of PT Tjahja Sakti Motor Corporation, Bintoro Tjitrowirjo, also agreed with Herman that the development of supplier industries is crucial for volume brands like Isuzu and Daihatsu.
"If we talk about the Isuzu Panther I think our commitment to the suppliers is very important," Bintoro said.
"The quality and commitment to delivery is the problem that is why sometimes we have to do it in-house because one car has 20,000 parts and when one part is not available well ...
"We facilitate capital and technology programs for our large and small suppliers to prevent problems in delivery and quality."
Likewise the director sales, marketing, service and parts for PT General Motors Buana Indonesia, Terry Johnsson, said that through the QF9000 supplier programs they were certifying companies for global standards.
Meanwhile, it appears the requests for assistance by the car- makers have not fallen on deaf ears.
Earlier this week at a special Cabinet session, President Soeharto instructed the Minister for Finance and the governor of Bank Indonesia to examine ways of funding local component suppliers.
According to newspaper reports the instruction related to companies supplying the Timor ''national'' car but any support for the components industry would be likely to benefit most car- makers.