Astra Daihatsu to produce local cars by 2019

JAKARTA. Automotive manufacturer Astra Daihatsu Motor (ADM) aims to increase local industrial content (TKDN) within its cars to 100 percent by 2019 amid the government’s call to promote domestic goods and services in the country.

ADM, the local subsidiary of Japanese auto maker Daihatsu Motor Company, recently launched two new types of low-cost “green” cars (LCGC), the Toyota Calya and Daihatsu Sigra, each with 94 percent local content.

ADM, however, aspires to reach an even higher local content level. “We expect to gradually increase the TKDN of all our cars to 100 percent by 2019,” said ADM president director Sudirman Maman Rusdi at the company’s plant in Karawang on Wednesday.

“Currently, we can’t afford to do that as some of the components are domestically really expensive, particularly for the transmission system.”

The government has encouraged foreign investors to partner with domestic businesses to increase the TKDN of goods and services, including cars and smartphones. TKDN includes the use of local material, workers and working tools in the production phase.

Low carbon emission (LCE) vehicles with a minimum of 80 percent local content will be given several incentives, including a cut in the luxury tax (PPnBM).

This year, ADM aims to produce around 450,000 cars, up from 420,000 cars in 2015. The company has collaborated with 254 first-tier suppliers and 1,270 second-tier suppliers nationwide, 111 of which are small and medium-sized enterprises (SMEs).

At least 900,000 workers are involved in its car production. It will involve more local workers and SMEs to increase its TKDN over the next three years.

Sudirman said the company was trying to increase the capacity of its human resources by sending 50 of its engineers to be trained in Japan. Some engineers have already left for Japan and some will travel there over the coming years.

Major expansions in the domestic steel industry are expected to help fulfill ADM’s ambition to push local content higher.

Krakatau Nippon Steel Sumikin, a joint venture between state-owned steel producer Krakatau Steel and Japanese steel producer Nippon Steel and Sumitomo Metal Corporation, has started the construction of a US$460 million hot strip mill in Cilegon, Banten.

Completion is scheduled for early 2019 and by then, the mill will add 1.5 million tons to Krakatau Steel’s current annual production of 3.15 million tons.

Demand for steel products from the national auto industry is estimated at around 1 million tons a year, with hot-rolled coil and cold-rolled coil each making up 50 percent of the demand.

The government has imposed antidumping measures on imported steel products to protect local producers. However, the Association of Indonesian Automotive Manufacturers (Gaikindo) is demanding that an exemption be put in place for steel products used in car manufacturing due to a lack of supplies from local steel makers.

“Many car manufacturers still import certain steel products from overseas to keep their production costs low,” Gaikindo chairman Jongkie Sugiarto said. (vps)