Facing BYD, Ministry of Industry: Automotive Investment Cannot Jump Straight to Full Manufacturing
Jakarta, CNBC Indonesia - The Ministry of Industry has emphasised that the process of investing in the automotive industry cannot be instantaneous and proceed directly to full manufacturing stages.
In the presence of industry players, including BYD Indonesia’s Head of PR & Government Luther T. Panjaitan, the government stressed that every manufacturer undergoes gradual phases before achieving full production.
This statement comes amid the entry of several new electric vehicle players into Indonesia. The government seeks to correct the perception that initial assembly processes should not be undervalued.
Director General of Metal, Machinery, Electronics, and Various Industries (ILMATE) at the Ministry of Industry, Setia Diarta, explained that all global automotive industries follow the same pattern when building production bases in a country.
“No automotive manufacturer in the world produces cars directly with full manufacturing. There isn’t any,” Setia stated at the Industrial Journalists Forum (Forwin) on Wednesday (22/4/2026).
This means, according to him, every company goes through a long process before reaching a fully integrated production level.
“They definitely have a long series of steps, starting from importing CBU, CKD, IKD, then they begin manufacturing stamping, painting, welding, and finally full manufacturing in Indonesia,” he continued.
The statement was made at a forum also attended by industry representatives, including BYD, which is currently building its production base in Indonesia. The government views this process as a normal part of the industrial investment cycle.
Setia emphasised that initial stages like CKD or assembly still hold important economic value, particularly in job absorption.
“If it’s imports, maybe five people at the showroom or dealer. For CKD motorcycles, at least 90 people are involved,” he explained.
According to him, assembly activities should not be looked down upon because they are still part of the production process that adds value.
“Assembly is a production activity even though it combines existing parts. And assembly is actually a production activity,” he asserted.
Furthermore, he explained that an increase in production scale will encourage further investments from automotive producers.
“When demand is large, they will definitely start investing again, adding more,” he said.
He also touched on the possibility of new vehicle models entering, which would trigger additional technology investments domestically.
“When new technology additions enter, that’s a different story from the current one. There will definitely be additional investments again,” he stated.