Gajah Tunggal may boost tire capacity as RI demand rises

Gajah Tunggal may boost tire capacity as RI demand rises

Bloomberg Jakarta

PT Gajah Tunggal, Indonesia's top tiremaker, said it might increase capacity by 10 percent to meet rising demand as cheaper loans boost automobile sales in the country.

"We must expand capacity as supply is getting tight," Finance Director Kisyuwono said in a phone interview on Friday. "We are doing the evaluations." He declined to elaborate.

Automobile sales in Indonesia rose 36 percent last year to 483,295 units, the Association of Indonesian Automotive Manufacturers (Gaikindo) said on Jan. 14. Motorcycle sales surged 38 percent to 3.89 million units.

Gajah Tunggal may expand capacity that stands at about 25 million units a year, Kisyuwono said, without elaborating.

Domestic tire demand in recent years increased between 10 percent and 15 percent annually, Aziz Pane, chairman of the Indonesian Tire Makers Association, said in a phone interview in Jakarta. "We may see this trend continuing this year."

Last year, Indonesian tiremakers, including Gajah Tunggal, sold about 35 million units, of which about 10.6 million units were to the domestic users, while the remainder were sold overseas, Pane said. Total capacity at the plants of all tire makers in Indonesia is at 37 million units a year currently.

Indonesia's economy expanded at its fastest pace in at least four years in the fourth quarter as the cheapest credit since 1998 spurred consumers to increase spending on goods including cars, motorcycles and mobile phones.

The economy will probably expand as much as 6 percent in 2005, buoyed by consumer spending and investment, the central bank has said.