Phenomenon of Car Production Sharing One Factory, Ministry of Industry Responds

Jakarta, CNBC Indonesia - The phenomenon of several automotive brands still utilising third-party production facilities or lacking their own factories in Indonesia has once again come under scrutiny. Several brands that still rely on third-party facilities, such as Handal for production, include Chery, Jetour, and Jaecoo.

This scheme is common in the early stages of expansion, particularly for brands newly entering the national market. The government views this practice as a reasonable part of industrial strategy during the investment development phase.

Director General of Metal, Machinery, Transportation Equipment, and Electronics Industry at the Ministry of Industry (Kemenperin) Setia Diarta considers the joint production or shared assembly approach in the automotive industry as nothing that needs to be questioned.

“Regarding joint production, this is actually interesting; the basic principle when it comes to CKD (completely knocked down) is that it can utilise facilities it owns or more universal facilities,” said Tata, quoted on Friday (24/4/2026).

In practice, the use of shared production facilities often serves as an initial step before manufacturers build their own factories. This scheme is also seen as capable of optimising the utilisation of existing facilities in the country. Additionally, this approach opens up efficiency opportunities for new industry players entering the market.

“So, is this wrong? There’s nothing wrong because the key point is to provide added value to that concept. In this case, for example, for the economy,” said Tata.

According to him, the business model in the automotive industry is indeed flexible and can be adjusted to each company’s strategy. This variation in approaches also becomes one of the factors driving new investments into Indonesia. The government sees this dynamic as a positive signal for the growth of the national automotive manufacturing industry.

“This can vary; the model can also be a choice. This is what actually drives why investment companies are starting to enter,” said Tata.

Kemenperin emphasises that the most important aspect of every production scheme is its contribution to the national economy. As long as the activity creates added value, its existence remains aligned with industrial policy directions. This includes promoting job creation and strengthening the domestic supply chain.

“So, there’s actually nothing wrong with producing vehicles as long as it provides greater added value,” said Tata.