Honda forms joint venture to strengthen RI operation

JAKARTA (JP): Japan's Honda Motor Co. Ltd. set up a joint venture with local partner PT Prospect Motor on Thursday in a bid to boost its automotive operations in the country.

Honda's chairman Yoshihide Munekuni said the firm, with paid- up capital of US$70 million, would streamline Honda's four-wheel automotive operations by centralizing tasks of two of its partners.

He hoped the move would allow Honda to better compete in local and overseas markets.

"The move is part of our plan to expand our operation in Asia and to strengthen our operation here," he told reporters following the signing of the joint venture agreement. "It is also part of our efforts to put ourselves at the forefront of the global automotive business."

Although automotive sales in Indonesia suffered a sharp downturn during the country's economic crisis, the future of the country's market remains promising, he said.

The Japanese automaker holds a 49 percent stake in the new company, PT Honda Prospect Motor (HPM), with the remainder owned by Prospect Motor.

HPM president Hadi Budiman confirmed the venture's $70 million in paid-up capital.

He said four companies serve Honda businessess in Indonesia; Prospect Motor which assembles Honda's four wheeled vehicles, PT Imora Honda, which produces car components used by Honda, PT Imora Motor, seller and distributor of Honda's car products and PT Honda and Prospect Engines Manufacturing (HOPE), which assembles engines and spare parts.

He said the new joint venture would combine work usually under Imora Honda and HOPE.

"The new joint venture will combine Honda's engines and components and spare parts industry, the distribution of the products and the assembly industry."

Hadi said Honda's car sales dropped by 83 percent in 1998, reaching 1,182 from 6,872 units in 1997. Honda sells its cars under Accord, Civic and City brands.

"This year, we expect to sell 1,300 cars," he said. "But it still very hard to predict the local market. Furthermore, some political events planned for later this year, such as the general election, are expected to make many people halt their spending on vehicles."

Hadi said the company planned to increase its exports of automotive components to 54,000 units this year, from 30,000 units in 1998, to offset the decline in local sales.

"Our export value is expected to increase to $18 million this year, from $15.9 million in 1998," he said.

Its automotive components are exported to the United States, the United Kingdom, Japan, Malaysia, the Philippines and Pakistan. (gis)