Jakarta / Fri, December 11, 2020 | 08:32 pm
In the next four years, the Transportation Ministry aims to finish building an international standard motor vehicle “proving ground” of Rp 1.64 trillion (US$ 116.5 million) to help Indonesian automakers capture the Southeast Asian market. Minister of Transport Budi Karya Sumadi showed a road map of the project whereby the proving ground, a racetrack-like site to be constructed in Bekasi, West Java, was scheduled to begin construction in 2022 and be completed by 2024. The proving ground will test motorcycles, three-wheelers cars, buses and trucks manufactured in Indonesia in compliance with the United Nations Regulation (UNR) international benchmark for vehicles in order to make them more consistent with the requirements of other markets in particular the ASEAN market.
“[Indonesia] produces a lot of cars], we use a lot of cars, but we don’t export as much,” the minister said during a Jakpost Spotlight webinar held on Thursday, entitled Improving Vehicle Safety in Indonesia by Proving Ground.
According to data from the Association of Indonesian Automotive Manufacturers (Gaikindo), Indonesian automakers exported 180,903 fully built-up (CBU) vehicles this year as of October, which represented a third of the total vehicle production as of that month. Nevertheless, Gaikindo aims to drive exports to 1 million units and domestic sales to 2 million units by 2025 against the backdrop of a cooling Indonesian car market as large cities, including Jakarta, are choking up with private cars.
In the next four years, the Transportation Ministry aims to finish building an international standard motor vehicle “proving ground” of Rp 1.64 trillion (US$ 116.5 million) to help Indonesian automakers capture the Southeast Asian market. Minister of Transport Budi Karya Sumadi showed a road map of the project whereby the proving ground, a racetrack-like site to be constructed in Bekasi, West Java, was scheduled to begin construction in 2022 and be completed by 2024. The proving ground will test motorcycles, three-wheelers cars, buses and trucks manufactured in Indonesia in compliance with the United Nations Regulation (UNR) international benchmark for vehicles in order to make them more consistent with the requirements of other markets in particular the ASEAN market. “[Indonesia] produces a lot of cars], we use a lot of cars, but we don’t export as much,” the minister said during a Jakpost Spotlight webinar held on Thursday, entitled Improving Vehicle Safety in Indonesia by Proving Ground. Read also: Jokowi Electric Ve signs
Nevertheless, Gaikindo aims to drive exports to 1 million units and domestic sales to 2 million units by 2025 against the backdrop of a cooling Indonesian car market as large cities, including Jakarta, are choking up with private cars. According to Statistics Indonesia, increasing vehicle exports is a way for the government to reinforce Indonesia’s trade surplus, which reached $17.07 billion from January to October this year (BPS). The surplus encourages the exchange rate of rupees and boosts the economic recovery of the country. Thailand is Indonesia’s biggest rival for the Southeast Asian auto market, but Vietnam, the rising economic star of the region recently indicated plans to go global after VinFast, a Vietnamese automaker, acquired a proving ground in Australia, which Gaikindo expects to boost regional rivalry in the future.
The Director General for Land Transportation of the Ministry, Budi Setiyadi, explained that the proposed proving ground would add 19 new test facilities to the current vehicle testing site (BPLJSKB) of the Ministry in Bekasi. In compliance with the UNR, a standard widely accepted by Southeast Asian countries through the ASEAN Mutual Recognition Agreements, the new installations will measure, among other things, vehicle emissions, noise levels, crash protection and mirror view (MRA). “At the very least, other countries will have confidence in products made in Indonesia,” Budi said. “He added that at 90 hectares “there are other [proving grounds] in ASEAN, but ours will be the largest. According to ministry results, the second largest in the area will be the one in Thailand.
He added that the proving ground would also feature facilities to test electric vehicles. The government issued last year a presidential regulation on developing a domestic EV industry. The proving ground is one of five multi-billion rupiah government-to-business cooperation (KPBU) projects forwarded by the Transportation Ministry in 2018. The five serve as pilots in cutting state budget (APBN) spending on big transport infrastructure projects. The Finance Ministry, through state-owned lender PT Penjaminan Infrastruktur Indonesia (PT PII), is helping the Transportation Ministry secure funding for the test site. PT PII president director Muhammad Wahid Sutopo said during the discussion that his company was awaiting the ministries’ nod to finalize a “final business case” document that would be presented to interested investors. The project was valued at Rp 1.64 trillion when announced in 2018 but Wahid said the new capital expenditure was estimated at Rp 2.09 trillion and foreign investors’ ownership would be capped at 49 percent as per existing regulations. The government, through an availability payment scheme, planned to pay for and take over the proving ground after a 15-year period from when operations begin.
He hinted that interested investors hailed from countries “that are the principle holders of auto producers in Indonesia.” According to Gaikindo data from October, the Indonesian market is over 80 percent dominated by Japanese brands. Industry Ministry metals, machinery, transport equipment and electronics industry (ILMATE) director general Taufiek Bawazier emphasized the proving ground’s ability to test higher safety standards for Indonesian-made vehicles. “It’s like a miniature of the hurdles in the real world,” he said in the webinar. “This is very important to test because our aim is improving safety.” For Indonesian automakers, the proving ground promises to save “billions of rupiah” from testing Indonesian-made vehicles or vehicle components, such as large truck engines, as far away as Germany, said Gaikindo chairman Yohannes Nangoi. “Every year, over 400 models need to be tested,” he said during the webinar, describing how automakers also often had to bring government officials with them, abroad, to witness such tests first hand. The planned proving ground, he continued, would also be needed for automakers to retest hundreds of older vehicle models as the government plans to phase out dirty Euro 2 fuels starting 2021 as per Environment and Forestry Ministry regulations.