Japan's Mitsubishi Corp says may invest in Indonesia auto plant

TOKYO/JAKARTA: Japan's Mitsubishi Corp is considering investing in a new car factory in Indonesia with its partners, the trading house said, as the country seeks to lure investments into manufacturing and reduce its reliance on volatile resources.

Mikio Sasaki, Mitsubishi Corp's senior advisor, met Indonesian president-elect Joko Widodo this week, a company spokesman said on Wednesday, adding that nothing had been decided yet.

Widodo, who will take office in October, is expected to bring in much-needed reform for business in Indonesia.

Indonesia's investment authority wants to attract more foreign investment into manufacturing and other value-added industries to wean the economy off the volatile resources sector, its chairman told Reuters last week. Mitsubishi Motors Corp, owned 10.1 percent by Mitsubishi Corp, had previously said it may build a new plant in Indonesia.

Its chief executive will visit the country next week, an individual familiar with the matter said.

The automaker currently manufactures commercial vehicles at a plant in Jakarta owned by Mitsubishi Corp and local partners.

"We are still considering (investing in a new plant) in a positive manner," a Mitsubishi Motors spokesman said. Several companies from countries including Japan have expressed interest to invest in the automotive sector, Mahendra Siregar said, as Indonesia is set to overtake Thailand as Southeast Asia's biggest car market.

"The medium term plan of these manufacturing companies looking at Indonesia is producing close to 3 million cars by 2020 (from around 1.3 million this year)," he said.

"I think that is regardless of what happens in other countries because that would be a good combination of, let's say, 75 percent domestic and 25 percent exports."

The Jakarta Post reported earlier on Wednesday that Mitsubishi Corp may invest up to $1 billion to boost its Indonesian automotive business. The company spokesman said the $1 billion amount was incorrect.