Global manufacturers starting raise interest in entering the Indonesian market because of its attraction in the eyes of investors and untapped potential.
Foreign automotive companies sets eyes on Indonesian market potential
There are several factors that make car manufacturers interested in selling cars in Indonesia and establishing assembly facilities in Indonesia.
These factors include the low ratio of car ownership in the country, and the development of adequate road infrastructure.
Yohannes Nangoi, Chairman of Indonesian Association of Automotive Industries (Gaikindo) said that the total population reaches 275 million people and the ratio of car ownership is 99 units per 1,000 residents. This demonstrates that the Indonesian market has potential for the world’s automotive companies.
In 2023, various newcomer brands will enter the Indonesian automotive industry. These brands come from China such as Haval, Ora, Tank, and Neta. Those from Europe who are re-entering the Indonesian market, such as Volvo, will enter and introduce themselves at the 2023 Indonesia International Auto Show (GIIAS).
Gaikindo asserted that the low ratio of car ownership in Indonesia is the main factor why car brands in the world want to enter Indonesia to do business and invest.
Meanwhile, other factors such as infrastructure are being promoted by the government of President Joko ‘Jokowi’ Widodo.
This infrastructure includes road infrastructure and adequate logistics such as toll roads and special ports such as the Patimban Port for export and import activities.
“You can see, the industry that has received such extraordinary attention from the government is automotive. Minister Basuki is building roads, building bridges,” said Yohannes, on July 13, 2023.
Currently, the Indonesian automotive industry plans to bring various types of cars, many of which are from abroad to be brought to Indonesia. It is planned that as many as 1 million units of cars for the 2025-2026 period will be brought.
Previously, the Ministry of Industry tried to come to Japan to appeal to provide opportunities for factories in Indonesia to export more.
“Last year’s exports were 470 thousand for CBU (Completely Built Up). It is hoped that this year it can reach 500 thousand. And in 2025-2026, there will be 1 million vehicles (exported),” he added.
Indonesia’s automotive sector constraints and business opportunities
However, Indonesia is still importing a number of automotive goods. This is because Indonesia has not been able to meet these needs, such as limited resources and experts.
Automotive goods imported by Indonesia come from Japan, South Korea, the United States, China and others.
This limitation includes materials and equipment, such as parts, sophisticated machinery, and electronic components. Meanwhile, experts in the manufacture and assembly of automotive goods are still lacking.
