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Germany's Volkswagen to build factory in Indonesia: minister

05-06-2011 15:59 BJT

JAKARTA, May 6 (Xinhua) -- Indonesian Industry Minister Hidayat said that Volkswagen, Europe's biggest automaker, plans to build a factory in Indonesia by the end of this year at the latest, local media reported here on Friday.

"I had a talk with them [Volkswagen] about their plan. They already have a blueprint for the project," Hidayat said after attending the ASEAN-EU Business Summit at the Jakarta Convention Center on Thursday.

Volkswagen has explored the possibility of setting up a production facility in Indonesia for the past three years, and the minister said it now hoped to realize those plans later this year. However, he did not reveal how much investment Volkswagen planned to put into Indonesia.

Earlier reports said that Volkswagen planned to spend 140 million U.S. dollars to build its first factory in Indonesia. The plan was to build a factory that could produce 50,000 Touran multipurpose vehicles per year, but the plan has laid dormant since.

"This is good news for the domestic automotive industry because the European automotive industry has no base yet in Indonesia, where the market has so far been dominated by Japanese and Korean brands," Hidayat was quoted by the Jakarta Globe as saying.

Volkswagen's intention to expand its business in Indonesia was in line with Germany's plan to increase its investment in the country, especially in the automotive sector, which is believed to possess huge potential.

Germany's foreign direct investment in Indonesia was 157.6 million U.S. dollars in 2010, representing 5.6 percent of the European Union's 2.78 billion dollars in total investment in Indonesia last year.

Local media reports quoted Julian Wilson, the European Union ambassador to Indonesia and Brunei, as saying in March that there were 700 European companies investing in Indonesia. Their investment represents 1.6 percent of the total EU Investment in Asia.

Editor:Yang Jie |Source: Xinhua

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