Honda to set up new car plant in RI

Adianto P Simamora, The Jakarta Post, Jakarta

Japan's third-largest automaker, Honda Motor Co Ltd., on Thursday said that it would invest some US$30 million to set up a new plant in Indonesia in a bid to strengthen its presence in the Southeast Asian market.

"We will announce it (the investment plan) tomorrow," Hiroyuki Yoshino, president and CEO of Honda Motor Co Ltd. told The Jakarta Post after the launching ceremony for its new car model called the Stream minivan.

The new plant, to be located in Karawang, West Java, is expected to manufacture about 40,000 units annually. The plant will begin operations by the middle of 2003.

It will eventually replace its old plant in Sunter, North Jakarta, currently with a capacity of about 17,000 units a year.

Hiroyuki and his top aides from Japan were in Jakarta to mark the groundbreaking ceremony of the new plant on Friday.

Hiroyuki said that Indonesia would be the first and the only country outside Japan that makes the Stream minivan.

"Indonesia will be the production base of the Stream for the ASEAN market," he said.

Meanwhile, Satoshi Okamoto, vice president of PT Honda Prospect Motor, the sole agent for Honda here, said that the new Stream minivan would be manufactured using 50 percent local parts and materials.

This means that the Stream minivans will be allowed to enter other ASEAN countries with lower import tariffs of between zero and five percent as stipulated under the AFTA scheme or the ASEAN Free Trade Area, which has been effective since the start of this year.

The AFTA agreement will allow all firms, which produce products using at least 40 percent ASEAN raw materials and parts, to concentrate production in one nation and export the output to other ASEAN countries with the low import tariff.

Under AFTA, the import tariff of automotive products within ASEAN (Association of South East Asian Nations) countries is set between zero and five percent.

Malaysia, however, is excluded as it decided to delay the opening up of its car industry until 2005 to protect local carmaker Perusahaan Nasional Bhd. or Proton.

"We have not decided about the export destinations yet in the ASEAN region, but our top candidate is Thailand," Satoshi told The Post.

The company expects to sell about 5,000 units of the Stream minivans this year.