Jakarta – Competition in Indonesia's heavy equipment market, which has already been hit hard by depressed mineral prices and investment during the COVID-19 pandemic, will become much fiercer with the entry of more Chinese products.
LiuGong, a leading Chinese heavy equipment manufacturer, entered the market only a few months ago but has gained 4 percent of the national market, said Eddy Rodianto, chief financial officer of publicly listed PT Intraco Penta (INTA). But American, European and Japanese equipment firms such as Caterpillar, Volvo, Hitachi and Komatsu remain the market leaders in the country.
INTA is a business group engaged in heavy equipment engineering, distribution, maintenance services, financing and steam power generation in Bengkulu and Batam.
A joint venture of INTA's subsidiary PT Intraco Penta Prima Servis and PT LiuGong Machinery Indonesia has been authorized to market, sell and distribute heavy machinery and spare parts for the LiuGong and Dressta brands under an agreement signed last May.
"This is a good sign for our business, especially because we have also signed a distribution agreement with Spain's Blumag, a manufacturer of alternative spare parts for such well known heavy equipment as Caterpillar, Volvo and Komatsu", Rodianto noted in a press release on Dec. 23 after INTA's virtual public meeting on the group's performance in the third quarter.
The heavy equipment association reported recently that the industry, which last year operated at only 60 percent of capacity, would end up this year with an average of just 30 percent of capacity.
But the association projected a much stronger market next year as mineral prices had begun to recover and the expected start of mass vaccination in the new year would enable significant easing of social mobility restrictions. Less restrictions on social distancing would revive activities in sectors such as construction, mining and plantation.
Bank Mandiri industry analyst Adjie Harisandi, citing the probable increase in the pace of infrastructure development, foresaw market demand growth of at least 6 percent next year from this year's level, which itself would average 50 percent of the 2019 sales volume.
In an analysis published in The Jakarta Post on Dec. 22, Adjie estimated that equipment sales would grow by about six percent to 6,123 units next year from the estimated annual sales of 5,883 units in 2020, on the back of recoveries in mining, plantation and construction. (vin)