Jayanty Nada Shofa, Jakarta – A senior minister recently reconfirmed South Korean auto giant Hyundai's interest in backing Indonesia's national car plan, saying that the company was keen on making vehicles with a local content of over 80 percent.
Indonesia's local content rule specifies that producers have to make sure that a certain percentage of their products use domestically produced inputs. The move has been one of Indonesia's go-to strategies to spur jobs for its sizable population.
President Prabowo Subianto recently revived a plan for Indonesia to mass-produce its own national car, even setting a target to achieve the dream within three years from now. Chief Economic Affairs Minister Airlangga Hartarto did not take long before he met Hyundai Motors' top brass in South Korea for some investment talks that could help put Prabowo's goal in full speed. Airlangga revealed that Hyundai had already come up with a design of what could be Indonesia's future national car.
"They [Hyundai] are proposing a national car with a local content of over 80 percent. However, it is still at the clay modeling phase," Airlangga told the press in Jakarta on Tuesday evening.
For context, clay modeling gives automakers a full-scale representation of the car prior entering the costly prototype production. Airlangga did not disclose more details on the type of car that Hyundai would offer.
"We will discuss this in more details later," Airlangga said.
Prabowo rekindled Indonesia's national car ambitions at a cabinet meeting that marked his first year in office a few weeks ago.
"I have allocated the funds. We have even prepared the lands to establish the manufacturing facilities. Our team is working on it," Prabowo told his ministers on Oct. 20.
It was then that the retired army general ordered his ministers to switch their fancy rides to Maung, the 4x4 vehicle produced by the state-run arms firm Pindad.
The existing regulations state that electric four-wheelers sold in Indonesia should have a local content of at least 40 percent, but the mandatory homegrown component level will rise to a minimum of 60 percent starting in 2027. The required local content for electric cars will reach at least 80 percent by 2030. Hyundai's Kona electric vehicle already has 80 percent locally produced content.
Hyundai has a manufacturing plant at the Deltamas industrial complex in Cikarang. The facility boasts an annual production capacity of up to 250,000 units. It is also Hyundai's first facility to produce battery electric vehicles in the ASEAN region. The company also has a battery cell production plant in Karawang, which it runs via joint venture with the Seoul-based LG Energy Solution and local company Indonesia Battery Corporation (IBC).
The Indonesian government is mulling granting the so-called "national strategic project" or PSN status to the national car plan. A project identified as a PSN will enjoy greater government support, including fast-tracked land acquisition and licensing.