According to Muhammad Lutfi, the head of the Indonesia Investment Coordinating Board, the government will be providing tax incentives for the US$140million which will be injected in the next 2 years and this seemed to be quite a sound investment because over the past few years, manufacturing MPVs in the country had proven to reduce cost by around 30% from results shonw by Toyota and Honda, whose Freed is being assembled in Karawang.
Should Volkswagen’s investment go through with the projected amount, then they will join a host of other manufacturers as Indonesia is now billed as the third fastest economy in Asia. Coming close behind China and India, even the leaders have had its brand establishing their plants here knowingly Foton, Geely, Great Wall and the more renowned Chery. The forecasted growth for Indonesia is at 4%.
Volkswagen has been looking east over the past few years to establish its ASEAN market development including a possible merger with Proton, Malaysia’s own car brand but the deal fell through hence, this would be seen as an extension to its original strategy. Indonesia’s transport industry is full of opportunities considering that the earning power are growing and spending ability expanding in the fourth largest country in the world. Public transport are not so efficient with no train or subway services as yet. P.T Astra International, the country’s automobile conglomerate is one of the major players in this industry having had business dealings with major car makers like BMW, Toyota, Honda and Peugeot among others.