Thailand loses auto investments to Indonesia

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car factory IndonesiaIndonesia has become increasingly successful in its bids to woo away investments of global car companies from Thailand.

Honda opened its second car-manufacturing factory in Indonesia this January, and Datsun, Nissan’s newly reintroduced low-cost brand, is set to follow suit in April 2014. Toyota is also looking at expanding production in Indonesia, officials say, as political uncertainty in Thailand sees businesses and investors look elsewhere in the region.

Indonesian officials have made no secret that they want to compete with Thailand for a large slice of the region’s vehicle production. Recent developments in Thailand could boost their efforts to woo big names to invest more in Southeast Asia’s largest economy, where car ownership remains relatively low but is expected to rise in the coming decade.

This week, Bloomberg reported that foreign investors had withdrawn some $3 billion from Thai stocks since protests began in November 2013 ago, and put $190 million into Indonesian shares so far in 2014.

Malaysia too has moved to compete with Thailand for investments in the car industry. Two weeks ago, it eased restrictions on foreign car makers by allowing all hybrid and electric passenger vehicles to be produced in the country.

Indonesia’s Industry Minister M S Hidayat recently said two big-name Japanese car makers had spoken to him about their plans to shift some production to Indonesia because of concerns in Thailand, but he declined to reveal more.

Indonesia produced more than 1.1 million cars, mainly for the local market, in the first 11 months of 2013, well behind Thailand’s 2.3 million. The ratio of cars to people in Indonesia remains low at 1:20, well below its neighbours. Singapore’s is 1:9 and Thailand’s 1:5. But demand in Indonesia is projected to grow with more than 1.3 million cars to be sold this year and more than 2 million by 2018, aided by backing for eco-cars like the Toyota Agya and Daihatsu Ayla. This makes moving facilities to Indonesia more enticing, in spite of concerns about infrastructure shortcomings.

Budi said Daihatsu, Suzuki and Toyota recently expanded their operations, and BMW and Mercedes-Benz were expanding their assembly plants.

Toyota is the market leader in Indonesia, with more than 434,000 cars sold last year, followed by Daihatsu with 185,000 and Suzuki with 164,000 units, according to the association of Indonesian carmakers, Gaikindo.

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Reading Time: 2 minutes

Indonesia has become increasingly successful in its bids to woo away investments of global car companies from Thailand.

Reading Time: 2 minutes

car factory IndonesiaIndonesia has become increasingly successful in its bids to woo away investments of global car companies from Thailand.

Honda opened its second car-manufacturing factory in Indonesia this January, and Datsun, Nissan’s newly reintroduced low-cost brand, is set to follow suit in April 2014. Toyota is also looking at expanding production in Indonesia, officials say, as political uncertainty in Thailand sees businesses and investors look elsewhere in the region.

Indonesian officials have made no secret that they want to compete with Thailand for a large slice of the region’s vehicle production. Recent developments in Thailand could boost their efforts to woo big names to invest more in Southeast Asia’s largest economy, where car ownership remains relatively low but is expected to rise in the coming decade.

This week, Bloomberg reported that foreign investors had withdrawn some $3 billion from Thai stocks since protests began in November 2013 ago, and put $190 million into Indonesian shares so far in 2014.

Malaysia too has moved to compete with Thailand for investments in the car industry. Two weeks ago, it eased restrictions on foreign car makers by allowing all hybrid and electric passenger vehicles to be produced in the country.

Indonesia’s Industry Minister M S Hidayat recently said two big-name Japanese car makers had spoken to him about their plans to shift some production to Indonesia because of concerns in Thailand, but he declined to reveal more.

Indonesia produced more than 1.1 million cars, mainly for the local market, in the first 11 months of 2013, well behind Thailand’s 2.3 million. The ratio of cars to people in Indonesia remains low at 1:20, well below its neighbours. Singapore’s is 1:9 and Thailand’s 1:5. But demand in Indonesia is projected to grow with more than 1.3 million cars to be sold this year and more than 2 million by 2018, aided by backing for eco-cars like the Toyota Agya and Daihatsu Ayla. This makes moving facilities to Indonesia more enticing, in spite of concerns about infrastructure shortcomings.

Budi said Daihatsu, Suzuki and Toyota recently expanded their operations, and BMW and Mercedes-Benz were expanding their assembly plants.

Toyota is the market leader in Indonesia, with more than 434,000 cars sold last year, followed by Daihatsu with 185,000 and Suzuki with 164,000 units, according to the association of Indonesian carmakers, Gaikindo.

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