Tiguan - Photo by Volkswagen

JAKARTA (TheInsiderStories) – Two global car maker, Germany Volkswagen (VW) and South Korea’ Hyundai Motor Corp., plans to build a car factory in Indonesia, a government official said on Thursday (12/20).

Director general at Industry ministry Harjanto said, VW wants to build an assembly line to produce Tiguan in Indonesia with an investment of around EUR50 million. VW will joint with local partner PT Garuda Mataram Motor, unit of PT Indomobil Sukses Makmur Tbk (IDX: IMAS), on the project.

While, Hyundai prepared an investment up to Rp12 trillion (US$827.59 million) to produce electric car in the country.

The manufacturer plan to build a factory with a capacity of around 250,000 units, including for electric cars. The plan, the production of electric cars as much as 53 percent will be allocated for exports to the Southeast Asian region and Australia while the remaining is for the domestic market.

He added, Hyundai’s move to build a factory in Indonesia is a step to try to reduce its dependence on its biggest market, China. Where Kia’s sales were a bit shaken after a diplomatic row between Seoul and Beijing and faced intense competition from local competitors.

In August, two south korean car maker Hyundai and KIA Motors were considering shipping vehicles made in China to Southeast Asia to cope with weak sales and excess capacity.

Hyundai does not have a car manufacturing plant in Southeast Asia, despite having several pure assembly operations in Vietnam. Last month, the car producer announced an investment of $250 million in Singapore’ ride-hailing Grab.

Indonesia gained the benefit followed over the United States – China trade war. Several global companies has announced to move their factories from China to Indonesia.

Beside the two car makers, other players such as smartphone maker Taiwanese Pegatron Corp., Besides Pegatron, other Chinese companies such as Wistron, Quanta Computer, and Compal that assemble Apple products, also plan to leave China, following the trade tensions.

US$1: Rp14,500

Email: linda.silaen@theinsiderstories.com