JAKARTA: Indonesia has the opportunity to replace Thailand as the automotive production hub in Asean, Vietnam News Agency (VNA) reported citing Indonesian Antara news agency.
This is evident from the output trend of vehicle production, policies and infrastructure, which continue to undergo improvements followed by increasing production capacity, domestic consumption and export volume, said Marcus Scherer, Head of the Global Automotive Sector of Ipsos Consulting.
He hoped that the policymakers, relevant parties and global automobile producers will consider this aspect, as it has a great impact on future automotive spare part supplies.
To date, Thailand is the largest automotive producer in the Southeast Asian region with annual production of two million cars compared with Indonesia, which manufactured 1.1 million units every year.
However, the production gap between the two countries is expected to halve by the end of 2020.
Indonesia exported some 23 per cent of its car production in 2015, while Thailand sold some 55 per cent of its domestic production abroad.
In a bid to become Aseans leading car production centre, Indonesia should overcome the production gap through combined solutions, including enhancing production capacity.
The country needs to increase direct investment to US$2.6 billion for the construction of new factories and improve production abilities of existing factories.
The Ipsos report highlighted that although exports have been significant this time, Indonesia still has considerable potential thanks to its domestic consumption market of 250 million people. This will encourage investors to harbour expectations for solid sale growth.
Meanwhile, Chukiat Wongtaveerat, a senior consultant manager at Ipsos Bangkok, said that Indonesias business climate has not brought significant benefits to the automotive industry.
According to the World Banks ranking on the ease of doing business, Indonesia is in 109th position among 198 countries, while Thailand stands at 49 th. The Indonesian Government set a target to reach the 40th position by 2018.
Marcus said that current conditions in the country showed a positive trend, such as easing regulations on foreign ownership and simplified licencing procedures.
