Hyundai Motor Co. has signed a memorandum of understanding (MOU) with the Indonesian government to establish its first manufacturing facility in Indonesia. The company is setting up the plant with the intention of supporting its expansion into new markets in the ASEAN region, and thus securing future growth engines in order to offset the slowdown in the global automotive market.
The state-of-the-art factory will be located on a site that sprawls over 8.35 million square feet site (77.6-hectare) in Kota Deltamas (City of Deltamas). This city serves as an integrated industrial, commercial and residential district on the eastern outskirts of Jakarta, Indonesia’s capital.
The MOU was signed at an official ceremony held at the Hyundai Motor plant in Ulsan, South Koreaand was attended by eminent dignitaries like Indonesian President Joko Widodo; Luhut Binsar Pandjaitan, coordinating minister for Maritime Affairs and Investment of Indonesia; Airlangga Hartarto, coordinating minister for Economic Affairs of Indonesia; Bahlil Lahadalia, chairman of Indonesian Investment Coordinating Board (BKPM) as well as senior executives from Hyundai like Euisun Chung, the executive vice chairman of Hyundai Motor Group and Wonhee Lee, president and CEO of Hyundai Motor Co.
Speaking at the ceremony, Euisun Chung, executive vice chairman of Hyundai Motor Group said that the establishment of factory was possible as an outcome of the continuous cooperation and support from the Indonesian government.
Chung added, “Hyundai will continue to listen actively and respond to the Indonesian government’s expectations and policies regarding eco-friendly vehicles, while continuously contributing to the ASEAN community.”
Hyundai plans to invest an amount of approximately USD 1.55 billion in the plant until 2030, including product development and operation costs. The Korean vehicle manufacturer plans to break ground for the plant in December and it is expected to begin commercial production in the second half of 2021. Once it is fully operational, it will produce about 150,000 units on an annual basis. Capacity will be ramped up and the factory will eventually be able to build approximately 250,000 vehicles every year when it reaches full capacity.
Hyundai’s plan is to use the plant to make compact SUV, compact MPV and sedan models which are specifically designed for customers in the Southeast Asian market. The plant will have facilities for stamping, welding, painting and assembly.
The company is also investigating the possibility of producing ASEAN-specific electric vehicles (EV) in its Indonesian plant with the goal of helping to promote Indonesia’s EV ecosystem, and thus contributing to the quality of life of the Indonesian people through its leadership in clean mobility technologies. Hyundai, as well as its sister company Kia Motors Corporation, plans to make Hyundai Motor Group the world’s third-biggest EV manufacturer in the world by 2025.
Hyundai, with its local partner suppliers, expects to create more than 23,000 new direct and indirect jobs at the Indonesian plant, becoming one of the biggest automotive employers in the Kota Deltamas district. The plant is anticipated to make an economic contribution worth more than USD 20 billion to the Indonesian economy over its first decade.
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