Mitsubishi asked to increase production in Indonesia

Antara, Jakarta

Despite the fact that automotive sales are expected to dive next year, newly appointed Minister of Industry Fahmi Idris asked PT Krama Yudha Tiga Berlian Motor (KTB), the local unit of Japan's Mitsubishi Motor Corp., to expand their production in this country.

"I request Mitsubishi to increase its (vehicle) production capacity in Indonesia," he said on Thursday when attending a ceremony commemorating the company's 1.5 millionth vehicle sale during its 35 years of operation here.

"Surely, Mitsubishi has its own considerations for choosing Thailand as its production base. As the industry minister, I question why it (production base) is not in Indonesia," he queried.

Mitsubishi closed down its passenger vehicle manufacturing plant earlier this year, due to profitability issues, but kept its commercial vehicle plant.

Fahmi said the industry ministry would support business expansion by global carmakers in a bid to create more jobs here.

KTB Director of Marketing, Rizwan Alamsjah, responded by saying that Mitsubishi might consider moving its production base back to Indonesia, if the government provided incentives. He did not elaborate.

Car sales this year are expected to reach 530,000 units, according to the Association of Indonesian Automotive Manufacturers (Gaikindo). The association estimated that sales next year will be at about 450,000 units, in part due to higher loan interest rates and increased luxury taxes.

During the event, KTB President Director Fumio Kuwayama said the company would invest between US$50 million and $60 million in its operations here starting in 2007 to meet the Euro II emissions standards.

The company has been largely dependent on its multipurpose vehicles like the Grandis and Maven, small trucks such as the Colt T-100 and Fuso, as well as the Colt Diesel truck.