Indonesia’s export from manufacturing industry is expected to soar!

In the recent past, Indonesia relied heavily on imports of machinery, and metal and steel products. In 2006 Indonesia's exports of metal products reached US$7.4 billion in 2006, while imported about $5.4 billion worth of metal products. Meanwhile, machinery exports reached $1.8 billion and imports $4.7 billion.

Excitement surrounds Indonesia’s machine tool and metal working industry as the demand of products from this industry is projected to rise exponentially to fulfill the rising demand from expansion of manufacturing industry and to support government’s serious intention to significantly reduce dependency on imported metal products and machinery.

Garment, footwear, electronics, furniture and auto part component industry are industry sectors that offer huge potential to optimize the country’s export. Indonesian's textile exports during the January-November period of 2006 grew by 10.5 percent, footwear by 13.7 percent, automotive components by 28.5 percent, and iron and steel by 79.8 percent.

Furthermore, the government hopes to see the domestic steel industry soar by 7 percent this year to meet more local demand and reduce the dependency on imported steel products, according to the Industry Ministry's director general for metals, machines and textiles.

Indonesia’s automotive industry is about to enter a new bright chapter, as the Ministry of Industry projected an increase in automotive products output by 20 percent to 380,000-400,000 units in 2007. The projected increased automotive output is not only derived from the rising local demand for automotive products but are also from export projections.

The Ministry of Industry also forecasted that automotive exports in CBU and CKD condition may increase this year. Exports of CBU units in 2007 is expected to reach 34,627, increasing from 30,307 in 2006, while exports of CKD units is expected to rise from 105,022 in 2006 to 118,045 in 2007

Moreover, The Ministry has also projected an increase in investment in the automotive industry from about Rp3.9 trillion to Rp4.1 trillion this year boosting production capacity utilization in the national automotive industry from 38 percent to 43 percent.

These projections are proved by the recent announcement from one of the global automotive giant, Toyota, who expressed its plan to designate Indonesia as one of its main production base to supply Multi Purpose Vehicles (MPV) in the global market. With the planned exports of Toyota Fortuner and Avanza to the Middle East, Latin America, Africa and Asia, Toyota Indonesia will overtake Toyota Motor Thailand as the largest supplier of Fortuner cars to the Middle East market.

On a similar note, South Korean automotive giant Hyundai will start producing trucks and buses in Indonesia as of March this year with an investment of US$23 million. The new Hyundai plant in Indonesia will have a capacity of producing around 300 buses and 200 trucks a month.

Both companies expressed the same rational for their confidence in Indonesia’s market. They are confident that Indonesia has good domestic market demand, coming from its huge population, as well as a lot of skilled human resources. Moreover, with the government serious plan to improve infrastructure and incentives for foreign direct investments, the country look more attractive than ever.

Taiwan is Investing Big in Indonesia

This year, Taiwan is planning to increase its investments in Indonesia, with a $47.5 million mining project currently being set up in East Kalimantan. A $22 million steel machinery joint venture project between Taiwanese and Japanese investors is also under preparation.

Moreover, one of Taiwan's largest motorcycle manufacturers, Kymco, recently set up an assembly plant in Indonesia, bringing in some 15 other investors to provide its spare parts.