Sunday, 26 February 2012


            Bank Indonesia predicted that demand for space for industry in Jakarta, Bogor, Bekasi, Karawang (Jabobeka) would continue to increase especially for the automotive industry. Some world class automotive industry would in the future join the business rush to buy space for industrial sites in this region.

       It was predicted that some automotive corporations like Toyota, Peugeot and general Motors who were planning to build new factories and assembling centers in Indonesia would be the propeller of industrial estate developments in Jakarta, Bogor, Bekasi and Karawang.

      That was the report of BI survey outcome being released last week (10/2). This report confirmed the ambitious plan of producers like Toyota wo planned to develop their industry through expansion. With the expansion, output capacity of Toyota in their second plant would increase production from 50,000 units to 120,000 units per year in 2014.

            Hence all in all Toyota’s total production in Indonesia, i.e. the Krawang Plant 1 and Karawang Plant 2 would come to 230,000 units per year. Total investment for production capacity for karawang 2 Plant would come to 41.3 billion yen or equal to Rp 7,8 trillion.

            Meanwhile BI also noted that through 2011 there was no additional industrial zone, so the total expanse of the four industrial zone was only 6,504 hectares. On the one hand there had been increase of demand which caused price increase of industrial land by up to 5.93% (q to q) to become Rp 1.28 million per meter.

           Land selling for industrial sites in the past there months of 2011 was posted at 32 hectares. Among them 27 hectares were in Bekasi and Cikarang, the rest in Jakarta. Demand for industrial land for industrial land for automotives, electronics, building materials and food industry was know to contribute significantly to land selling.

        Land selling for industrial sites in quarter IV-2011 inched up by 0.68% (Q to Q) to become 73.24%. Meanwhile occupancy level and rental tariff of industrial land during quarter VI-2011 rose by 0.34% (q to q) and 1% (q to q), so the occupancy level become 66.21% and tariff of land rental came to Rp 36,852 per meter/month.

            For example at the Banten Industrial Estate, the total supply of industry rose by 0.14% (q to q) to become 72.13% and increase of selling price by 6.2% (q to q) to become Rp 847,979 per meter.

            BI’s estimate was not surprising, because Indonesia’s was projected as base of Toyota automotive industry in Asean, the product of which would be marketed to Europe, the Middle East and Africa. It seemed reasonable if Toyota planned to increase their car production in Indonesia from 102,000 units to 230,000 units in 2004.

           Next year Toyota was even reported as having plans to expand their Industry to the maximum to strengthen Indonesia’s position as exporter to Europe, Africa, and the Middle East. The Government of RI responded positively to Toyota’s plan and make Indonesia the base of Toyota Industry.

          There were at least two potential market areas for the automotive industry. Firstly was Indonesia’s domestic market with attractive features among others vast population (242 million) new emerging generation of middle class who were aggressive (100 million people) and high population of productive age (60% of population).

         With sizable income, they were prospective market for the automotive sector. It came as no surprise that streets of Indonesian cities were packed with motorcars of various brands from all parts of the world particularly Japan and Europe.

         For the domestic market, probably the growth of multi function cars (SUV and MPV) would exceed the sedan type of vehicles. Reasonable because the typical habit of Indonesia motorists was to travel in group so the DUV and MPV were regarded as more suitable because of the bigger passenger capacity (5 – 7 passengers) whilst the sedan type was regarded as more suitable for Government officials, state owned companies (BUMN) and the private sector. There were also individual groups who were target-worthy because they go for sedan cars.

        The development of areas outside Java especially Jabobeka would stimulate market demand for automotive. Now a number of cities were developing into places as target market to aim at, i.e. Palembang, Pakanbaru, Jambi, Denpasar, Palu, Gorontalo, Balikpapan, Samarinda, Pontianak, Manado, Makassar, and Papua.

        The second target market were export, particularly countries which were not affected by the crisis in Europe. The target destinations were for example: Africa, the Middle East, and ASEAN states. Some European countries beyond the Euro zone was a potential market as they were not affected by crisis which dragged some European countries. Only thing was that automotive producers, in selling their products, must wisely detect consumers’ characteristics and behavior of the respective target in terms of local customs, tradition, preferences etc.

         To summarize, growth projection of the automotive sector their year would be in the range of 10% - 12% as follow up of 2011 attainment which was around 10%.  

 Business News - February 22, 2012

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