Indonesia's Auto Sector Investment To Pip Thailand
BMI View : In recent months, we have observed a trend of more investment flowing into Indonesia's auto sector than Thailand's. We expect this trend to continue in the short term as Indonesia has a faster growing domestic market than Thailand. However, we see Thailand's strengths, which make it a regional export powerhouse, re-asserting themselves in the medium- to long term and ensuring that the country remains a conducive habitat for autos investment.
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Indonesia's largest automotive components manufacturer, Astra Otoparts, has entered into a joint venture agreement with Japanese firm MetalArt Corporation to build a new engine plant in Karawang. The factory, which will be operational in July 2014, will produce crankshafts, gears and conrods for four-wheeled vehicles. Initial output is expected to be 60,000 parts a year and the plant will have the potential to produce more than 8mn parts by 2017.
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