Industry Minister Airlangga Hartarto met with CEO of Mitsubishi Motors Corporation Osamu Masuko after holding a meeting in Jakarta on Wednesday (03/10) - Photo by Ministry of Industry

JAKARTA (TheInsiderStories) – The automotive industry in Indonesia is still showing a positive surge in efforts to improve its performance amid the dynamics of the global economy. One of them is Japan’s car producer Mitsubishi Motors Corp. aimed to increase investment in Indonesia.

The commitment has delivered by CEO of Mitsubishi Motors Corporation Osamu Masuko in the meeting with Industry Minister Airlangga Hartarto in Jakarta on Wednesday (03/10).

“They will also establish an Xpander engine factory in Indonesia so that it can optimize the domestic component level,” the minister said in a written statement.

Hartarto emphasized that the automotive industry is one of the five manufacturing sectors that are prioritizing its development because it is prepared to be a pioneer in the implementation of the fourth industrial revolution. This is in line with the Making Indonesia 4.0 roadmap initiative.

For this reason, the ministry actively encourages the creation of new investments and business expansion, and invites the automotive industry to adopt the latest technology. This effort is expected to create a conducive business climate to realize the car production target of 1.5 million units by 2020.

Furthermore, in the first quarter of 2018, the transportation equipment industry grew by 6.33 percent, above the economic growth of 5.06 percent. The vehicle industry and other means of transportation, also included in the top five manufacturing sector investments in the first quarter of this year with a value of Rp3.35 trillion (US$231.03 million).

“The automotive industry is a mainstay sector that contributes significantly to the national economy,” said the minister of Industry by adding this reflected in its contribution to GDP which reaches 10.16 percent in 2017 and is able to absorb direct employment of around 350 thousand people and indirect labor as much as 1.2 million people.

Masuko said, Indonesia was made as a Mitsubishi Motor production hub besides Japan and Thailand to export to the whole world. “At present, Xpander’s production is Indonesia, has been exported to Vietnam, the Philippines, Thailand, Bolivia, and will continue to other countries,” he added.

To meet these targets, its unit PT Krama Yudha Indonesia plant in Bekasi, West Java will increase production capacity of Xpander. Currently, the annual production capacity reaches 160,000 units, and will be increased to 220,000 units by 2020.

“This development is the result of an investment commitment of 4 billion Yen (around Rp.540 billion) and will provide additional employment for 800 people in the Bekasi factory to complete the total employees to 4,100 people,” Masuko explained.

Xpander assembly will automatically increase from 115,000 units to 160,000 units in 2020. Exports also jumped from 30,000 to 50,000 units. Xpander has booked 100,000 booking numbers in Indonesia since its introduction in August 2017 until the end of September 2018.

In addition, Masuko added, Xpander engines will be produced at Nissan Motor Indonesia (NMI), a subsidiary of Nissan Motor Co., Ltd in Indonesia, starting in 2020. This will increase the ratio of local spare parts usage to Xpander from 71 percent to 80 percent which will certainly bring economic benefits to local supply chains. Development at the NMI facility will be able to produce 160,000 units of machinery per year.