Mitsubishi’s Export Debut Gives Hope for a More Robust Car Exports

President Joko Widodo accompanied by Industry Minister Airlangga Hartaro and CEO of Mitsubishi Motors Corporation Osamu Masuko in the inauguration of the first Mitsubishi Xpander export - Photo by President Office

JAKARTA (TheInsiderStories)— Although it has been difficult for Indonesian car assemblers and manufacturers to export their product overseas, as reflected by the low figure of local car exporters, the country’s car shipments overseas have been on the rise over the last five years.

A slight hope for the country’s export acceleration came on Tuesday (25/04), when the President Joko Widodo participated in the first export debut of PT Mitsubishi Indonesia on Tanjung Priok port in North Jakarta.

The producer, which operates car assembling and manufacturing facility in Indonesia will export 3,000 units of Mitsubishi Xpander 7-seater multipurpose vehicles to the Philippines markets.

Indonesia exported 231,169 cars last year, about 19 percent of the total 1,216,615 units of four-wheeled vehicles that the nation produced. Minister for Industry Airlangga Hartarto sexplained, most of these exports consist of the completely knocked down products while the completely built up export increase from 194,000 in 2016 to 231,000 pieces in 2017.

Southeast Asia’s largest economy has seen a number of automotive principles investing in the country by expanding their manufacturing plants, as they are upbeat on the prospects of rising sales in the country that is seeing its middle income class increasing.

In his speech, the President said that his administration sees boosting investment and exports are key to spur the country’s economic growth.

Added by Hartarto, regarding efforts to boost the national automotive export market, his ministry along with the Coordinating Ministry for Economic Affairs and Ministry of Finance is preparing a policy of providing fiscal incentives to encourage the production of sedan type vehicles.

Produced in Cikarang, West Java, the Xpander factory absorbed 3,000 workers, with a prospect to increase to 4,000 on the back of higher demand. Mitsubishi said the factory absorbs products from about 120 local suppliers that provide automotive components.

Xpander that are shipped to the Philippine will be re-exported into the latin American markets as well as Africa. Widodo said his administration is committed to support manufacturing industry with export-oriented markets.

Indonesia’s exports last year stood at US$11.82 billion, growing 16.2 percent, amid the recovery in global commodity prices. Non-commodity prices started capturing a bigger share in overall export figures.

In a bid to support Indonesia’s exports, the president will launch an online single submission system to ease the process in getting business permits and investment in the country.

A more optimistic view about Indonesia’s car exports were also conveyed by Johny Bunarto Tjondro, a director from Indonesia’s biggest car distributor PT Astra International Tbk (IDX: ASII), who projected car sales at home at 1.1 million this year.

Its unit, PT Toyota Astra Motor (TAM) sets a target to capture 32 percent market share, while PT Astra Daihatsu Mobil (ADM) aims to secure 18 percent. TAM and ADM currently together contribute to 75 percent of Indonesia’s total exports. Johny expected car exports from the Astra Group to increase as the group is targeting more destinations.