Mabua, Detroit Diesel to make diesel engines

JAKARTA (JP): PT Mahasara Buana (Mabua), a subsidiary of Humpuss Group Indonesia, plans to team up with U.S. firm Detroit Diesel Corporation to make diesel engines for local and regional markets.

Humpuss' president, Hutomo Mandala Putra, said yesterday the two companies would form a joint venture to make engines for vehicles, power generators, industrial and marine applications.

"The plan will probably be realized by the end of next year," Hutomo said after yesterday's inauguration ceremony for PT Mabua Detroit Diesel.

Mabua Detroit Diesel, a joint venture between Detroit Diesel and Mahasara Buana, is Indonesia's sole distributor of Detroit Diesel's engines.

Hutomo, President Soeharto's youngest son, said the engines would be used for Timor Diesel commercial cars and trucks, which will be made at his car making plant in Cikampek, West Java, next year.

The cars are expected to have the capacity of 2,500 cc.

PT Timor Putra Nasional, which is controlled by Hutomo, was licensed last year by the government to develop and distribute a national car in cooperation with South Korea's Kia Motor.

Tax breaks

The company is allowed to import the cars from Kia with a series of tax breaks before its own manufacturing plant is finished.

Hutomo said Detroit Diesel Corp. would provide the technology for the engines, while Mabua would distribute the products and provide the assembling plant.

The company would assemble engines made by Italy's VM, which had been bought by Detroit, with capacities of between 1,300 cc and 4,200 cc, he said.

In the early stage, most engine parts would be imported, he said. "But within 2 to 3 years we will be able to increase the use of local contents to over 50 percent."

The chairman of the Detroit Diesel Corporation, Roger Penske, said he was optimistic about the cooperation with Timor Nasional because his company was expanding in South East Asia.

He said the joint venture with Humpuss Group was part of his company's global expansion strategy.

"We will also use this base (Indonesia) to distribute our products in the ASEAN market place," he said.

He was optimistic the planned joint venture could be formed soon after another Detroit project was completed.

"We are presently engaged in opening a new facility in Brazil, and it usually takes between 14 and 18 months before we can start on a new project," he said.

Detroit Diesel now makes its products in Italy and the United States. (02)