South Korean tire maker Hankook on Tuesday inaugurated a new manufacturing plant in Bekasi, West Java which is committed to produce nearly six million tires each year for passenger cars, light trucks and ultra high performance vehicles.
Built over the course of three years on a 60 hectare Lippo industrial estate in Cikarang, the plant, Hankook’s seventh, will underline the company’s vice chairman and CEO, Seung Hwa Suh’s statement at the opening ceremony of having a strong commitment to the Southeast Asian country.
The company said it would invest up to $1.1 billion in the plant by 2018, and that it would act as an export base for North American and Middle Eastern markets, as well as a regional business hub for emerging Asian markets.
Hankook produced more than 94 million tires worldwide in 2012, up 8.3 percent from the previous year. It expects annual global production capacity to reach 100 million units by 2014.
Hankook said it chose to build its new plant in Indonesia because of a promising market, a rising middle-income class and extensive domestic rubber production.
Demand for tires continues to soar in Indonesia, with domestic car sales at 1.1 million units in 2012, the highest yet recorded. Automotive industry insiders expect the same figure for 2013, despite rising interest rates, rising inflation, environmental concerns and global economic turbulence.
“The nation has the potential to produce 3.3 million tons of natural rubber annually, but we have only developed a small fraction of that figure,” Indonesian President Susilo Bambang Yudhoyono said in his speech at the new plant’s inauguration.
The nation’s tire industry, he added, is a leading competitor in the global market, growing about eight percent per year, in accordance with rapid vehicle industry growth. “The tire industry in Indonesia will keep growing and become one of the world’s tire industry development centers,” Yudhoyono said.