Volkswagen to Invest $140 Million in Its First Indonesia Plant
July 2 (Bloomberg) -- Volkswagen AG, Europe’s largest automaker, will spend $140 million in the next two years to build its first factory in Indonesia, where economic growth is helping boost demand.
The automaker plans to build a factory that can make 50,000 Touran multi-purpose vehicles a year, Muhammad Lutfi, head of Indonesia’s Investment Coordinating Board, said in an interview in Jakarta today. The government will provide tax incentives to Volkswagen, he said without elaborating.
Making-multi purpose vehicles in Indonesia is 30 percent cheaper than in other Southeast Asian nations because of government tax breaks, said Lutfi. Wolfsburg, Germany-based Volkswagen is also expanding in China and India as economic growth in Asia helps more people to buy automobiles while recession damps demand in Europe and in the U.S.
“It’s important, it’s Volkswagen, a global brand making it in the country,” Lutfi said.
Volkswagen in a May 11 statement said it will use the Indonesian plant to export to countries in Southeast Asia. Mathilda Rinta, a spokeswoman for Volkswagen in Indonesia, didn’t immediately respond to an email seeking comment.
Indonesia is forecast to expand 4 percent this year, according to the International Monetary Fund, making it the fastest growing major economy in Asia after India and China.
The German automaker, already the biggest carmaker in China, said in May it will invest 550 million euros ($776 million) with a local partner to expand a factory in the country. Volkswagen in March opened a 580 million euro factory in India.
Volkwagen’s Automobili Lamborghini SpA’s unit opened its first Indonesian showroom earlier this year. Indonesian carmakers sold a record 607,805 cars last year.
Toyota Motor Corp., the world’s largest automaker, has been making the Innova brand of MPVs in Indonesia since 1977. Honda Motor Co., Japan’s second-largest automaker, in March said it will make and sell the Freed minivan in Indonesia this year.
The automaker plans to build a factory that can make 50,000 Touran multi-purpose vehicles a year, Muhammad Lutfi, head of Indonesia’s Investment Coordinating Board, said in an interview in Jakarta today. The government will provide tax incentives to Volkswagen, he said without elaborating.
Making-multi purpose vehicles in Indonesia is 30 percent cheaper than in other Southeast Asian nations because of government tax breaks, said Lutfi. Wolfsburg, Germany-based Volkswagen is also expanding in China and India as economic growth in Asia helps more people to buy automobiles while recession damps demand in Europe and in the U.S.
“It’s important, it’s Volkswagen, a global brand making it in the country,” Lutfi said.
Volkswagen in a May 11 statement said it will use the Indonesian plant to export to countries in Southeast Asia. Mathilda Rinta, a spokeswoman for Volkswagen in Indonesia, didn’t immediately respond to an email seeking comment.
Indonesia is forecast to expand 4 percent this year, according to the International Monetary Fund, making it the fastest growing major economy in Asia after India and China.
The German automaker, already the biggest carmaker in China, said in May it will invest 550 million euros ($776 million) with a local partner to expand a factory in the country. Volkswagen in March opened a 580 million euro factory in India.
Volkwagen’s Automobili Lamborghini SpA’s unit opened its first Indonesian showroom earlier this year. Indonesian carmakers sold a record 607,805 cars last year.
Toyota Motor Corp., the world’s largest automaker, has been making the Innova brand of MPVs in Indonesia since 1977. Honda Motor Co., Japan’s second-largest automaker, in March said it will make and sell the Freed minivan in Indonesia this year.