Japanese automotive giants have pledged a combined investment over the next few years to expand their production capacity and make electric vehicles in the country
The companies told Industry Minister Agus Gumiwang Kartasasmita during his visit to Japan this week. "Honda has committed to increasing its investment by Rp 5.2 trillion [$361 billion] until 2024. This will include developments on new models in Indonesia," Agus said in a virtual press conference on Thursday. "There will also be a production facility moved to Indonesia, and Honda also committed to building a new car model that is based on electric engine," Agus said.
Apart from the plan, Honda would also develop Indonesia into a key hub for its global auto parts supply chain and completely build-up (CBU) car exports.
Currently, Indonesian-made Honda auto-parts find their way to nine countries, including Thailand, Malaysia, Vietnam, Pakistan, Saudi Arabia, and Japan. Today Honda exports CBU cars only to two countries, Vietnam and the Philippines. "They have committed to adding export destination countries to 31 countries in Asia, Africa, North America, Central America, and South America. The new model exported to those 31 countries will only be produced in Indonesia," Agus said.
Mitsubishi and Suzuki
Earlier, Agus met with Suzuki executives, who said the company would increase its investment in Indonesia by Rp 1.2 trillion by 2024. This investment would go toward the development of the minivan Ertiga and sport-utility vehicle XL7. The minister, however, did not mention any electronic vehicle investment from Suzuki.
Mitsubishi Motors had also pledged to invest Rp 11.2 trillion ($779 million) over the next four years to produce Xpander hybrid or Xpander plug-in electric vehicle and expand its manufacturing plant in Bekasi, West Java, Agus said on Wednesday. The investment would increase Mitsubishi's Bekasi plant production capacity to 250,000 cars per year from 220,000 today, he said. Mitsubishi is also committed to adding nine export destination countries, bringing the total to 39 countries.
During a meeting with the Mitsubishi executive, Agus also encouraged the company to use Indonesia as a base for exporting cars to Australia, taking advantage of the Comprehensive Economic Cooperation Agreement between Indonesia and Australia (IA-CEPA) that the two countries signed in 2019. "It is the government's mission to come to Japan to lobby automotive principals to expand the export market," Agus said.
Honda and Mitsubishi's investments follow their rival Toyota, which had pledged $2 billion in investment until 2024 in a move to ride President Joko "Jokowi" Widodo's latest electric vehicle push. Agus, who also met with Toyota's executive during his visit, said the company would also expand its export from Indonesia to 100 countries over the period.