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Indonesia Launches First Domestic Car “Esemka”

President Joko Widodo inaugurates the automotive factory of PT Solo Manufaktur Kreasi (Esemka) in Boyolali, Central Java, Friday (6/9/2019) - Photo by Presidential Secretariat

JAKARTA (TheInsiderStories) – Indonesian President Joko Widodo finally launched the first domestic car of Kiat Esemka’ sport utility vehicle (SUV) in Boyolali Regency near his hometown, Solo, Central Java on Friday (09/06). The plan, in the first year, this car will be produced as many as 3,500 pickup units with a total production capacity of 12,000 units per year.

Widodo said, the Esemka car is an Indonesian brand. “This Esemka car is an Indonesian brand and principal,” said the Head of State.

The inauguration also introduced production facilities at its factory, PT Solo Manufaktur Kreasi (Esemka). President Director Eddy Wirajaya said, the Esemka factory is a national private company that is 100 percent owned by the private sector, not a national car as understood so far.

“More precisely it is a car made in Indonesia by the children of their own nation,” he said.

According to him, the Esemka factory would follow every set rule and all applicable regulations in the industry. “We hope that with the opening of this facility, Esemka can pioneer the progress of the automotive industry made in Indonesia,” he said.

In the inauguration two Esemka variants were launched, namely Bima 1.2 and Bima 1.3. Both products are priced at around Rp110 million (US$7.74 million).

The launch of this Esemka car answers the criticism of Widodo’ political opponents, which he had pioneered about 10 years ago while serving as Mayor of Surakarta. The car was assembled by Vocational High School students in Surakarta.

Through the car, the name Widodo soared into the national political scene. Not waiting for a long time, the furniture entrepreneur was then carried by his Demokrasi Indonesia Perjuangan party as a candidate for governor of Jakarta

But after Widodo was elected Governor of Jakarta, and later elected President of the Republic of Indonesia, the fate of the Esemka car became unclear. The president himself only used the Kiat Esemka car as the official car of the mayor of Solo for two days.

After that, the car was stalled because the completeness of the documents did not yet exist. The car had experienced problems related to emissions testing to capital problems.

Minister of Industry Airlangga Hartarto said the inauguration of Esemka could have a multiplier effect on the economy, such as opening new jobs. He stated, “In the initial stage, it will absorb 300 workers for one shift.”

Hartarto conveyed that the government gave full support in efforts to develop the automotive industry in the country. Because the automotive industry is one of the five manufacturing sectors that are prioritized to be able to compete globally based on the Making Indonesia 4.0 road map.

In the production process, Esemka factory is committed to optimizing the use of local components. This was marked by the signing of a Letter of Intent (LoI) together with the Automotive Components Small and Medium Industries Association in August 2019 in Jakarta.

Hartarto said that many domestic vehicle component industries have become part of global value chain suppliers. Nationally, there are currently 1,500 automotive component companies in Indonesia which are divided into Tier 1, Tier 2 and Tier 3, which are spread throughout Indonesia, especially in the provinces of Jakarta, Banten, West Java, Central Java and East Java.

The strength of the automotive industry in Indonesia can also be seen from the achievements of exports of automotive products and components that continue to show an increase. In 2018, Completely Built Unit exports reached 265 thousand units, then  Complete Knocked Down around 82 thousand sets, and components of more than 86.6 million pieces.

“The value of our component exports has penetrated to $2.1 billion. That is, the structure of this sector is deep enough. For example, exports of vehicle tires are around $1.2 billion. In addition, the chassis, glass and seats can be produced domestically. So, our steel and plastic industries are able to be competitive,” he said.

US$1= Rp14,200

Written by Marcel Gual, Email: theinsiderstories@gmail.com