Honda to set up 3rd motorcycle plant in Bekasi
Honda to set up 3rd motorcycle plant in Bekasi
Zakki P. Hakim, The Jakarta Post, Jakarta
Japan's Honda Motor Co. Ltd. will set up a third motorcycle
manufacturing plant in Indonesia in a joint venture with PT Astra
International to take advantage of the growing motorcycle market
in Indonesia, the world's third largest market, the company
announced on Wednesday.
The new US$100 million plant, located at MM2100 industrial
estate in Cikarang Barat, Bekasi, West Java, will start
production in October 2005, and have an annual capacity of up to
1.2 million units.
PT Astra Honda Motor (AHM), the joint venture company,
currently produces 2 million motorcycles from the existing two
plants, located in Sunter and Pegangsaan, both in Jakarta.
AHM president director Minomaru Yamashita said on Wednesday
that Honda was enhancing its production capacity by adding a new
plant as the market was expected to grow even more this year.
"When the new plant is running at full capacity, Indonesia
will replace India as the biggest Honda motorcycle producer in
the world," he was quoted as saying by Antara during a ground-
breaking ceremony.
India currently produces about 2.3 million motorcycles
annually, almost half of the Indian market of 5.5 million units
this year. The biggest market in the world, meanwhile, is China
with a market size of 14 million units this year.
The motorcycle market in Indonesia reached 3.3 million units
in 2003, a 22 percent jump from 2002.
The local market is expected to grow even more in 2004 to
about 4 million units, according to the Ministry of Industry and
Trade.
Director general of metal, machine, electronics and
miscellaneous industries at the ministry, Soebagyo, said in his
speech: "The decision (to invest in Indonesia) is a sign that
investors trust Indonesia as a place where they can expand their
businesses."
He was hopeful that with the new Honda investment, Indonesia
could become a key base for world motorcycle production.
The new plant is expected to directly provide new 4,000 jobs
and indirectly create more jobs in some 150 local component
manufacturers and suppliers.
Meanwhile, AHM marketing director Johannes Hermawan said that
Honda production here would continue to be focused on the
domestic rather than the export as it would took time before the
firm could fully adopt the Euro II exhaust gas standard required
in some export destination countries.
In 1998, motorcycle sales in Indonesia dropped to 492,626
units from 1.85 million in 1997 as the country felt the pinch of
its worst-ever economic crisis. Sales started to recover in 1999
with 587,402 units sold that year. Sales further increased to
979,000 motorcycles in 2000, despite the entry of several Chinese
brands into the domestic market.
Sales eventually moved closer to the pre-crisis level by
reaching 1.64 million units in 2001, before soaring to 2.29
million units in 2002. The availability of cheap bank loans,
thanks to the lower interest rate environment, contributed to the
strong sales.
Prior to the monetary crisis the local market was dominated by
Japanese brands Honda, Yamaha, Suzuki and Kawasaki, and Italian
brand Piaggio Vespa. In the late 1990s, cheaper Chinese
motorcycles started to flood the country.