Indomobil, Japanese firms set up joint venture

Indomobil, Japanese firms set up joint venture

JAKARTA (JP): The car assembler PT Indomobil Investment Corporation yesterday signed a joint venture agreement with Tochigi Fuji Sangyo K.K and Marubeni Auto Sales Corporation of Japan to produce automotive components at Cikampek, West Java.

Indomobil's president, Subronto Laras, told the press that the new company will be in operation in 1998 and will be engaged mostly in heat treatment and machining for making ring gears, flywheel, differential cases, pinion shaft and covers for coupling.

With a total investment of US$10 million, the new company, called PT Tochigi Fuji Indonesia Manufacturing, will be owned 60 percent by Tochigi Fuji Sangyo K.K, 30 percent by Marubeni and 10 percent by Indomobil.

Subronto pointed out that the company's products will be sold on the domestic and foreign markets, notably in Japan. "After some time, we'll focus on the other members of the Association of Southeast Asian Nations (ASEAN) and other Asia Pacific markets," he said.

By the year 2000, the company expects annual sales of $7.5 million, of which exports will contribute $3.12 million.

Asked by reporters, Subronto said that "we cannot yet quantify the foreign exchange that can be saved by the production of the components."

But he said that up to the present, the country's total imports of automotive components reached $1.6 billion per year. "I think such imports will be decreased as more companies like this joint venture will produce automotive components here," he said.

He said his venture would the first to use the heat treatment process which he said was high-tech.

Tochigi Fuji conducted a number of feasibility studies in various countries before deciding to set up the joint venture in Indonesia.

This Japanese company operates mainly in the production of automotive and aircraft components, agricultural equipment, satellite and construction machinery.

Indomobil Investment Corporation is a holding company of the Indomobil Group which assembles automotive vehicles of various trade marks, including Suzuki, Volvo and Hino, and manufactures automotive components. (13)