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.