The impact of Indonesia’s rating being promoted to investment grade was shaping up. Initially Indonesia’s role as investment site for foreign investors had started decades ago when Japanese automotive producers invested in Indonesia. After 40 years of endeavors in this country, Toyota Manufacturing Corporations (TMC) declared Indonesia as the base of automotive industry for the world’s market.
Additional investment from Rp 13 trillion for the next 5 years which would probably increase further to Rp 26 trillion for the mid-term would magnify Toyota's achievement. Additional investment would bring great multiplier effect to propel development of component industry in Indonesia.
Today Toyota had 105 main supplier companies, including among others 44 suppliers of body components, 39 suppliers of unit components and 22 other suppliers like raw materials and logistics. The spirit was visible in the big teem flanking President Director of TMC Akio Toyoda to Indonesia recently.
With Toyoda, there were five top executives of Toyota Group who came by, i.e. Representative of Toyota Group 1 consisting of President Director of Toyota Autobody Co Ltd. Takuji Arnioka, President Director of Toyota Tsusho Corporation Jun Karube, President Director of Aisin Seri Co Ltd, Fumio Fujimori President Director of Denso Corporation Nobuaki Katch; and President Director of Daihatsu Motor Co .Ltd. Koichi Ina.
In tandem with the increased Investment, Toyota Group also planned to increase workforce. Today the number of workers accommodated was posted at 32,000 people and was planned to increase to 41,000 to in 2015. Six companies which planned to increase investment were among other TMC through PT Toyota Motor (TAM) Manufacturing Indonesia (TMNIN).
Word we out that TMC would soon build an engine factory. Today a piece of land was bought in the region of Karawang West Java. TMNIN was also accomplishing additional production capacity of Factory I in Karawang from 110,000 units to become 130,000 units in March 2013. In addition to that to build Factory II also In Karawang which was scheduled for operation in March 2013 producing 70,000 units to be increased to 120 thousand units early 2014. Hence total capacity of the two factories became 250,000 units in 2014 and through maximizing plan would be increased further to 300,000 units per year.
Meanwhile through TAM Toyota continued to strengthen marketing network and service facilities by opening new dealers which now had come to 235 units spread out all over Indonesia. As per October, TAM was able to maintain position as market leader with total sales of 333,991 units and market share around 40% of total sales of national cars per October 2012 amounting to 816,322 units.
Through PT Astra Daihatsu Motor (ADM) Toyota Group was building various facilities of production and Research & Development (R&D) to increase production capacity. Investment would also be made by Toyota Auto Body Copy Corp Ltd through PT Toyota Auto Body and PT Sugity Creative to operate assembling which produced a number of new type of vehicles for the Indonesian market.
Meanwhile Denso Corp Ltd through PT Denso Indonesia would intensify industry by expanding components industry through increased capacity of 2 of their factories in Indonesia. Soon in 2014, PT Denso Indonesia planned to bull their third new factory in Bekasi to produce high tech components tike Engine Control Unit.
Autro components made by PT Denso Indonesia were not only used for Toyota and Daihatsu production needs but also for other brands and some of them were exported. Furthermore through PT Aisin Indonesia, Toyota Group would expand their production of components; and they had set schedule for producing engine front module for 2015.
The investment development was part of the implementation of global strategy which would continue increase production and sales to the emerging markets like Indonesia. In the next three years, Toyota sets target to expand market share and sales to the emerging markets.
In 2011, of 7,097 million units of global sales, around 45% or 3,193 million resulted from sales to the emerging markets. In the eyes of Akio Toyoda Indonesia was posting impressive growth in the past few years; and Indonesia was rated as one of the key to successful business in the future.
Last year, Toyota Indonesia exported 88,000 units or 81% of total mortar vehicles from Indonesia. Today National Domestic Consumption contributed nearly 60% of the nation’s economy as a whole. The condition was indicated by stable consumers’ price, increased consumer’s purchasing power, and better business trust which contributed to increase of domestic demand.
The above picture proved that Indonesia had been able to be back on her feet again after misery that befell on this country not long ago. The favorable condition eventually kept Indonesia from being underestimated by the international businessworld in terms of investment climate. Investor’s zest to invest their capital in Indonesia was considering national economic growth which had the potential to accelerate in times when some developed nations were having negative economic growth.
Just when angle advanced countries were affected by crisis that originated from Europe and America, Indonesia remained to stand tall. For Indonesia’s size worth economy of USD 850 thousand, 6.4% growth as regarded as high. The Coordinating Board of Investment (BKPM) noted that investment realization in Indonesia, whether Domestic Investment (PMDN) or Foreign Investment (PMA) in second quarter alone reached Rp 76.9 trillion. The average quarterly investment was around Rp 75 – Rp 80 trillion so in a year it would come to Rp 300 trillion.
Indonesia’s opportunity to draw foreign investors was considerably great, the prospect was visible in national economic condition which was stable and was able to stand the patter of global crisis. This was the condition that caused many investors to relocate their investment to countries with stable economy.
This appeal was strengthened by Indonesia’s bargaining position which was in 2nd best position in G20 with growth of 6.4%. As a whole estimated GDP growth in Asia 2012 inched down by 0.2% against previous year from 7.9% to 7.7%. Thanks to positive economic growth amidst global financial crisis, Indonesia’s bargaining position moved up in the eyes of the world’s automotive market.
The plan of Toyota’s Group to increase investment in Indonesia was sound evidence that Indonesia was getting more appealing in the eyes of investors. Indonesia’s positive economic growth made this country more important to Toyota in developing automotive business, not just due to historical factor – 40 years of achievement in Indonesia but also because Indonesia treasured enormous market potential and population of 250 million spread out in 17,000 islands. Those were the factors that Toyota took into consideration before investing in Indonesia.
Commitment of Toyota’s Group to increase investment for the next 5 years was aimed at increasing production capacity of assembling and automotive component’s industry. This resolution was not felt by the Government alone but it was also what the Indonesian people pin hope on toward happiness for all.
Japan’s commitment would at least expand the constellation of automotive industry in Indonesia, while accommodating more workers by 9,000 people to become 41 thousand people. This was the reality which directly increased contribution to national economy. Toyota’s investment was part of their global strategy which focused on increasing production output for exporting to emerging markets including Indonesia.
Indonesia was chosen as one production bases with Thailand. Indonesia was rated as one of the emerging markets with impressive growth performance in the past few years. It was not just Japanese automotive producers who were interested in expanding their business in Indonesia but also automotive producers from Europe like Germany.
This was evident in the statement of CEO Mercedes Benz Claus Wielder who planned to produce M-Class Series cars. According to Widener, assembling of ML 350 series cars in Indonesia indicated that investment climate at home was conclusive for growth of that company. Indonesia was rated as a potential market for Mercedes Benz. Car assembling in Indonesia also reflected Indonesian skill and talent which was capable of assembling with high precision and high discipline.
Production of ML 300 in Indonesia was supported by experts from Germany and the USA who had conducted trainings in assembling process wilt the highest standard of quality. Even inks structure was built by new technology platform.
The company’s commitment wee to progress and develop together with the Indonesian people. PT Mercedes Benz Indonesia was expending in line with economic development in Indonesia and the world. Relocation of assembling factory of M-Class to Indonesia was Mercedes Benz’s big agenda for year and 2012.
PT Mercedes Benz Indonesia saw that public interest in M-Class series and the market potential of premium of ML 358 4 MATIC proved the company’s confidence in propelling the automotive industry of high end automotive products and resolution to tap the Spot Utility Vehicle (SUV) premium segment. Mercedes Benz ML 350 4 MATIC Blue efficiency applied the benzene-fueled injection system or direct petrol injection. This third generation vehicle had the capacity of 3.0-litre V 6 and they had passed the high emission EUS standard test.
In response to great investment plan of the two world-class principal companies it was only sensible and reasonable for the Government of RI to strive to create a conclusive investment climate. As known, investors always tend to consider all the risk and prospect of return in making their Investment.
What the Government could expect to do now was to simplify regulations and to ensure transparence in investment regulations. Overlapping regulation and indefinite rules tend to increase risk in investing. Not less important thing to be done by the Government was to build nifty-structure.
In regard to the Indonesian Economic Growth Acceleration Masterplan (MP3EI) the Government, guideline six corridor development concept could procure infra-structure especially outside Java. Readiness of infra-structure was most important to investors because they minimized production cost and increased profit from Investment.
In addition to that, readiness of skilled workers was necessary to attract investors to invest in Indonesia. As with the demographic advantage offered by Indonesia, It was an attraction of its own to foreign investors. The demographic “bonus” means increased number of workforce in years to come. However, the Government must see this demographic advantage as a challenge not just opportunity.
The challenge means that Indonesia had to prepare trained and skillful workers according the needed specification and nature of industry in the future, highly competent and qualified workers, and mastery of technology would be the main pillars of economic transformation process in Indonesia. These were the facture that made Indonesia a prima donna of investment site in Southeast Asia. In the eyes of foreign investors, Indonesia, in spite of all the handicaps was still rated as the most attractive location for investment compared to the other 9 ASEAN countries.
Regretfully in many aspects Indonesia was still problematic when it came to investment climate. Things like high corruption, poor infra-structure were all the handicap factors that posed as minus point to the overall appraisal. Supposedly Indonesia had the potential to become an advanced nation in 2030 considering some plus points.
Firstly, Indonesia’s economic condition was rated as the most stable in the world. Bank Indonesia had confirmed that Indonesia’s economy had been the most stable in the past 4 - 5 years.
Secondly, around 90% of Indonesia’s economic growth originated from other islands outside Java, meaning economic growth was not only centered in Java or Jakarta.
Thirdly, around 11% of Indonesia’s exported commodities originated from the non oil-gas sector. This was denial to the myth that Indonesia’s domestic economic growth was dominated by export.
Fourthly, exploitation of natural resources had been reduced even to the extent of 7%. This was denial to the perception that natural resources was the main sustained of economic growth.
Fifthly, around 60% of economic growth was supported by increased productivity. This also denied the assumption that economic growth was only clue to increased workforce. This was the momentum for Indonesia not to be mere local champion but also be important at regional and global level.
Business News - November 28, 2012