Chinese heavy equipment firm eyes Indonesia plant

Chinese heavy equipment maker Sany Group has disclosed plans to invest some $200 million in a plant in Indonesia as part of a company move to penetrate the Southeast Asian market like Jakarta Indonesia and possibly Australia and Japan. Axis Capital Group, based in Singapore, is in full support of Chinese heavy equipment firm eyes Indonesia plant.

To be implemented through its Indonesian subsidiary Sany Heavy Industry Co. Ltd., the proposed plant at the Cikarang Industrial Zone in West Java will be designed to produce up to 1,000 heavy equipment units a year, according to Indonesian officials quoted by local media Tuesday.

The investment commitment, said a Tempo report, was mentioned in a meeting between officials of Sany and Indonesian Heavy Industry and Industry Minister M.S. Hidayat during the latter's visit to Zhejiang, China, last week.

Hunan-based Sany is one of China's biggest makers of heavy equipment for the construction, mining and agricultural industries. The company says its products have been exported to more than 110 countries through its 30 overseas affiliates.

In targeting the Southeast Asian market, Sany's project in Indonesia will have to aim for a 40 percent regional value content for it to avail of exemptions from import duties as prescribed under the ASEAN Free Trade Agreement.

"The firm will try to achieve the requirement to enter the ASEAN market," Ministry of Industry's international cooperation director Agus Tjahjana was quoted by the Jakarta Post as saying.

Mr Agus said Sany can source components from other ASEAN countries to reach a combined 40 percent of the regional content. ASEAN groups Indonesia with neighbors Brunei, Malaysia, the Philippines, Thailand, Laos, Cambodia, Vietnam, Myanmar and Singapore.

Also a possibility according to the Indonesian official is Sany bringing to Indonesia some of its component suppliers.

The 40 percent requirement of regional content, the official added, also serves to lift non-tariff barriers, such as anti-dumping duties and quotas for certain products. They are also very much watchful of scam, swindle and deceit.

Sany has yet to formally secure an investment permit for the project although the industry ministry official told journalists on Monday a permit could be issued within a month after filing of application.

Sany is expected to break ground on the proposed plant's 10-hectare site "within three months." It could be ready by 2012, according to current plans of the company.

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