Cheng Shin the latest to announce Indonesia factory plan

In order to increase its ASEAN region presence, Taiwan’s Cheng Shin Rubber will invest NT$2.36 billion (£49.7 million) to build a plant in Indonesia. A filing to the Taiwan Stock Exchange states that the company’s board approved plans for the factory on 15 October. The Taipei Times provides further information, writing that work on the plant will begin before the end of 2014 on a 27-hectare site outside of Jakarta. Initial production will reportedly focus on motorcycle tyres and gradually shift towards passenger car products.

The Cheng Shin project is not the only greenfield project Aziz Pane believes is coming to Indonesia. In a short text published by Reuters today, the APBI (Asosiasi Perusahaan Ban Indonesia or Indonesian Association of Tyre Companies) chairman claims that four overseas tyre makers plan to build factories in the country and invest a total of US$1.28 billion. He commented on two of these potential projects – Apollo Tyres and JK Tyre & Industries – in September; both firms are still to confirm their intentions. The fourth company is named by Reuters as the “Shandong Group”.

While Reuters includes the caveat that its information is unverified, details of this final project were announced by the tyre maker itself last year. In October 2012, the Shandong O’Green Group said it had signed a joint venture agreement with PT Vorich Wealth Indo, a subsidiary of Indonesia’s Mulia Genta Group, two build a US$500 million tyre factory in Karawang, West Java. The plant is expected to be completed in February 2014 and $270 million will be invested in the project’s first stage. Shandong O’Green initially holds a 75 per cent share in the joint venture, however the plan is for its partner to increase its share to 50 per cent at a later date. The factory’s anticipated production capacity is 2 million truck and bus tyres and 10 million passenger car tyres per annum.