16 April 2010 | Written by: Mohamed Hairul Borhan

Indonesia aims to become one of Asia’s automotive production hubs to take advantage of the upcoming formation of the ASEAN common market by 2015.

Currently, Indonesia’s automotive companies are mainly involved in assembling vehicles using components which are mostly imported from other countries.

However, plans are being drafted to provide fiscal incentives to spur the growth of the automotive components industry, said Industry Minister M.S. Hidayat.

He said, “With such fiscal incentives we hope more automotive component plants and other supporting industries will be established in Indonesia.”

Mr Hidayat also revealed that part of the plans include enticing major automotive makers to produce cheap and environmentally friend cars.

Several major car makers have already been invited to take part in this initiative, which may receive support in terms of fiscal incentives such as tax exemptions from the Finance Ministry.

Indonesia’s four-wheeled vehicle assembling companies employed about 194,000 people while motorcycle producers hired about 172,000 people.

New investments in the four-wheeled industry and motorcycle industry amounted to IDR3.4 trillion (S$518.6 million*) and IDR3 trillion in 2009, respectively.

*Exchange rate correct as at 16 April 2010