LG keeps its commitment to invest in Indonesia

LG keeps its commitment to invest in Indonesia

Sari P. Setiogi, The Jakarta Post, Tangerang, West Java

PT LG Electronics Indonesia, a subsidiary of the South Korean-
owned electronic company LG, is scheduled early next month to
start operating the expansion unit of its refrigerator factory,
which has been constructed with an investment of US$9 million.

Corporate plant manager Moon I. Jang told The Jakarta Post
here on Friday that the establishment of the expansion unit
indicated his company's strong commitment to continuing
investment in Indonesia.

LG Electronics Indonesia has a strategy different from other
electronic companies in facing the recent investment climate
downturn in the country, he said.

"While another electronic company, Sony Corp., has chosen to
pull out its plant from Indonesia, our strategy is to make more
investment in the country," said Jang.

Japanese giant Sony Corp., which employed about 1,000 workers,
decided to relocate its audio manufacturing plant to Malaysia in
November 2002, due to security and labor problems in Indonesia.

President of LG Electronics Indonesia Young Ha Kim told the
Post that besides the $9 million investment for the expansion
unit, the company also invested some $6 million to $7 million per
year for the creation of new designs and models.

He said the expansion unit in Tangerang, West Java, would
double the company's potential capacity to 1.2 million
refrigerators per year.

The doubling of the capacity was necessary to meet increasing
demand for refrigerators from the local market and other
countries, including South Korea, he said.

The company's refrigerator exports increased by 100 percent
from 50,000 units in 2001 to 100,000 units last year. This year,
LG's goal is to triple the exports to 300,000 units, he said,
adding that most exports would be destined for Malaysia.

"We, therefore, will increase our refrigerator production from
370,000 units in 2002 to 700,000 units this year," he said.

He added that the other 400,000 units to be produced this year
would be sold domestically.

Commenting on the relatively slower demand in the local market
as compared to the export market, Kim said that the competition
between other producers was quite tough in the country.

"The price is getting more competitive every day," he said. He
also complained that many Indonesians thought LG was a Chinese
brand.

Over the last few years, many Chinese products of low quality
entered the Indonesian market, and are offered at low prices.

Kim said that his company would allocate US$10 million for
advertising and promotion in the country during 2003, the same
amount as last year's.

Besides the refrigerator factory in Tangerang, LG Electronics
Indonesia also operates washing machine and television set
factories in the town, and television and computer component
plants in Bekasi, east of Jakarta.

With the current factories located in Tangerang and Bekasi, LG
Electronics Indonesia employs about 1,500 local workers and 15
Korean expatriates.

"We are not sure yet how many extra workers we will hire for
the expansion, because we still have to calculate it against the
total orders we will get. At the beginning, we may recruit only
about 50 to 100 new employees," Jang explained.