Home News South Korea’s Hyundai Aims to Build High Technology Car Factory in Indonesia

South Korea’s Hyundai Aims to Build High Technology Car Factory in Indonesia

South Korea's top management of Hyundai Motor Group on Thursday (07/25) met with Indonesian President Joko Widodo - Photo: Palace Press Bureau.

JAKARTA (TheInsiderStories) – South Korea’ Hyundai Motor Group top management met with Indonesian President Joko Widodo at the Merdeka Palace, Jakarta today (07/25) to inform the company plans to build a high technology car factory in West Java in 2021.

The Seoul-based automotive company lead by Executive Vice Chairman Euisun Chung also asked for incentives to build the car factories. Minister of Industry Airlangga Hartarto said the factory planned to produce cars with various technology schemes ranging from electrical vehicles, fuel shell vehicles, autonomous vehicles, to drift car.

“The president is also positive in responding to this because the automotive industry will become one of the mainstays of Indonesia’s exports going forward. One of them is an electric car,” said the minister after the meeting.

Previously, West Java Governor Ridwan Kamil has proposed the Cirebon – Patimban – Kertajati triangle as a location for the factory, saying the government plans to develop the area into Indonesia’ largest special economic zone.

The region will come with a special levy for custom duties, while its proximity to the new Patimban Port, slated to commence the first-stage operation by the end of this year, create the ideal conditions to become an export hub, he said.

The South Korean car manufacturer itself at the end of 2018 was known to begin exploring negotiations with the government regarding the possibility of establishing an electric vehicle factory in the country. The progressive step is part of the company’ investment worth US$880 million.

Hyundai has chosen Indonesia as the location of the electric vehicle factory because the nation has large reserves of lateral nickel ore. The availability of these raw materials is so important because it is needed for the process of producing lithium-ion batteries as the main power source of electric cars in the future.

It’s estimated, with this investment, Hyundai will build an assembly plant with a production capacity of 250,000 units per year, including for electric vehicles. Hyundai has been active 15 years in Indonesia through PT Hyundai Indonesia Motor since 1995.

Early this month, the company has affirmed its $2.8 billion investment in Indonesia as part of the South Korean automotive giant’s plans to make Indonesia one of its car export hubs and develop electric vehicles in Southeast Asia.

The company will start manufacturing in 2021, aiming to produce between 70,000 and 250,000 cars per year, including sport utility vehicles, multipurpose vehicles, hatchbacks, and sedans, as well as electric vehicles.

“Hyundai has confirmed its commitment to immediately start investing in Indonesia,” said minister Hartarto, who visited Seoul and met with Hyundai executives on June 25.

“The target is 47 percent of production for the domestic market and 53 percent for export,” he added.

The government is seeking to boost foreign investment in the country. It is offering generous tax incentives to investors, the latest of which, a plan to cut corporate tax to bring the country’s rate on par with that of others in the region.

Harjanto, the industry ministry’s director-general of metal, machinery, transportation equipment, and electronics, earlier said Hyundai had chosen Indonesia as a manufacturing center for its electric cars, due to the availability of raw materials.

“Indonesia has nickel ore, used in the production of lithium-ion batteries – an important component in electric vehicles,” he said.

Last year, Hyundai announced a $250 million investment in Southeast Asian ride-hailing firm Grab, to develop electric vehicles in the region.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com