Hyundai Signs Deal To Build A $1.5 Billion Car Plant In Indonesia
The Hyundai Indonesia plant, to be built in Bekasi near Jakarta will start production in 2021 to produce 250,000 vehicles a year.
Hyundai Motor Co. Ltd. has signed a deal to build a $1.5 billion car plant in Indonesia, its first in Southeast Asia, the South Korean carmaker said on Wednesday.
The deal comes as Seoul looks to diversify its trade-dependent economy, the world's 11th largest, beyond traditional partners China and the U.S.
Indonesia is the region's largest automobile market, and the $1.55 billion deal aims to "combat slowing demand in the global automotive market" and propel future growth, Hyundai said in a statement.
The plant, to be built in Bekasi, east of Jakarta, will start production in 2021, Hyundai said, ultimately aiming to produce 250,000 vehicles a year.
South Korea's President Moon Jae-in has been pushing a "New Southern Policy", seeking to bolster economic ties with Southeast Asia as the country aims to reduce over-reliance on Beijing and Washington, and Hyundai's announcement co-incided with a South Korea-ASEAN summit in Busan.
Hyundai, South Korea's largest automaker, said it was building the factory in Indonesia to avoid import tariffs ranging from five to 80 percent in the ASEAN region. At present, it lags Japanese rivals in the region, with sales reaching 122,883 units versus Toyota's 854,032 and Renault-Nissan-Mitsubishi's 351,267 from January to September this year, according to research firm LMC Automotive.
South Korea's central bank last month cut its key interest rate to its lowest in two years in an effort to prop up slowing growth with the economy hit by a bitter trade spat with Japan.