Photo by Ministry of Industry

JAKARTA (TheInsiderStories) – Vice President (VP) Jusuf Kalla inaugurated the first factory of PT SGMW Motor Indonesia (Wuling Motors) at GIIC Industrial Zone Deltamas, Cikarang, West Java on Tuesday (11/7).

The inauguration of this factory was conducted directly by VP accompanied by Minister of Industry Airlangga Hartarto, West Java Governor Ahmad Heryawan, Vice Governor of Guang Xi Province Lan Tianli, and Chairman of SAIC Motor and SGMW Chen Hong.

SGMW is a local joint venture between SAIC Motor Corporation Limited, U.S General Motors, and Guangxi Automobile Group Co., Ltd. The factory, which was built in 2015 with an investment value of Rp9 trillion (US$676.69 million) on an area of ​​60 hectares.

The factory is an integrated car production facility that unites the assembly facility with its supply chain in one complex, making it a car factory with efficient production facilities. The Chinese-invested plant is built on a 60-hectare plot of 30 hectares for assembly plant facilities and 30 hectares for Supplier Park.

With the start of this mass production process, Wuling Motors will launch its first product in Indonesia, namely Confero S in August. In addition, Wuling Motors will absorb a local work force of 3,000 people.

According to Airlangga, the government requested that Wuling Motors not only targeting the domestic market only, but also can make Indonesia as an export hub of its production for regional and global markets so as to increase foreign exchange revenue.

Meanwhile, President of Wuling Motors, Xu Feiyun said the construction of the company’s first factory outside of China shows the company’s strong and long-term commitment to enter the Indonesian market.

“We are ready to contribute to the growth of the Indonesian economy, especially in the automotive industry,” he said during the inauguration.

Wuling Motors currently has 15 leading international component suppliers who will occupy Supplier Park and work with more than 20 local component suppliers. These suppliers have started their operations together with the commencement of the production process at the plant.

“As part of the localization strategy, 56 percent of Wuling Motors’ first MPV component will come from local suppliers. We also plan to continue to increase the number of local components and suppliers for our products in the future, “added Xu Feiyun.

Wuling Motors is currently building a sales and service network throughout the country. A total of 50 selling points and services will be ready to serve customers in 2017.

Indonesia lead ASEAN Market

Airlangga explained, from the production of 1.1 million units last year, about 200 thousand units of cars are marketed to export destination countries and the rest is absorbed by the domestic market. Therefore, the government requested the national automotive industry continue to aggressively expand the export market to make a balance with the needs of the domestic market.

“The government is targeting automotive production to penetrate 2.5 million units by 2020 to compete in the global arena,” he said.

He believes, the structure of the national automotive industry will be deeper due to supported steel industry roadmap with a target capacity of 10 million tons in 2025. The minister hopes, the automotive industry in Indonesia can absorb more raw materials from within the country.

“The availability of raw materials for the automotive industry, especially steel, resin, synthetic rubber, and aluminum is expected to be fulfilled domestically by 2019,” he added.

Production capacity of four-wheeled vehicles will reach more than 1.2 million units in 2017 or an increase compared to the production of 1.1 units in 2016. This increase can strengthen Indonesia’s position as one of the automotive industry’s strength in ASEAN, after Thailand.

“The achievement is expected to further boost the contribution of the automotive industry sector to the national economic growth,” said Airlangga.

The Ministry of Industry noted that by 2016, the contribution of the transportation equipment industry sub-sector (including the automotive industry) to gross domestic products of non-oil industry sector reached 10.47 percent or the third largest after the food and beverage industry sub-sector of 32.84 percent and the metal goods industry sub-sector, Computers, electronics, optics, and electrical appliances by 10.71 percent.

Airlangga is optimistic that the performance of the domestic automotive industry this year will be able to grow better in line with Indonesia’s product market potential and positive national economic growth. This is driven by the recovery of the global economy as well as comprehensive structural reforms in the country.

“With their production capacity of 120 thousand units per year, of course increase the national production capacity to reach 1.2 million units per year at this time,” he said.

(Written by Linda Silaen, Email: linda.silaen@theinsiderstories.com)

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