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Indonesia's tire industry remains more export oriented.

Article Excerpt
The strong growth of the country's automotive industries including car and motorcycles industries is not sufficient to improve the performance of the country's tire industry. One of the reasons is large imports including illegal imports of car fires. Local products, therefore have to compete with illegally imported products which are sold at cheap prices. Meanwhile the prices of raw materials especially rubber have increased to follow the rise in the oil prices. Tire producers grouped in the Association of Tire Companies (APBI) are confronted with tough competition from illegal products and at the same time they have to deal with growing production costs.

In order to discourage illegal imports, an Indonesian National Standard (SNI) on tires will be imposed in March, 2005. The policy was based on a decision of the Industry and Trade Minister No. 595/MPP/Kep/9/2004 issued on Sept. 23, in 2004. The regulation was effective 6 months after issuance. The SNI will be effective on five types of tire namely tire of passenger car with SNI 06-0098-2002, tires of light truck with SNI 06.0100-2002, tires of trucks and bus with SNI 106.0099.2002 and inner tubes of motor vehicles with SN106-6700.2002.

Some of tire producers have taken preparation to comply with the regulation such as by providing laboratory tests. There are 7 laboratories owned by private companies and two owned by government institution used to test the quality of tires in the country.

However, the laboratories owned by tire makers have no accreditation yet from the National Accreditation of Committee (KAN) as the laboratories have not yet met the standards set by the institution. Tire makers that have laboratories are Bridgestone Tire Indonesia, Goodyear Indonesia, Gajah Tunggal, Sumi Rubber Indonesia, Mega Safe Tyre Industry, Elang Perdana Tyre Indonesia and Industri Karet Deli.

Local tire makers also face problem with the anti dumping import duty (BMAD) imposed on carbon black, one of the basic materials for tires. APBI, therefore, has urged the finance ministry revoke the previous decision of the finance minister No. 397/KMK/2004 on BMAD imposed on carbon black. Under the decision issued on Sept. 6, 2004, imports of black carbon from South Korea, India and Thailand, are imposed with an anti dumping import duty for 5 years.

Meanwhile, based on data at APBI, the country's tire production totaled 35.3 million units in 2004--up 15.6% from 30.5 million units in 2003. Exports in 2004 were valued at US$ 455.3 million, up 22.5% from US$ 370.3 million in 2003. Despite growing demand in the country to follow the increase in car and motorcycles production, producers continue to be more interested in export market. This year, exports are projected to rise in value to US$ 500 million.

Gajah Tunggal (GT) takes over assets of two subsidiaries

The number of tire producers in has remained unchanged from 19 over the past several years, and 13 of them are members of APBI. Based on 2003 record, APBI members had an annual capacity to produce 37.1 million units of cars and 20.7 million units of motorcycle tires. The licensed capacity was 40.2 million for car tires and 20.3 million units for motorcycle tires a year.

Among the APB members are PT Chung-A Indonesia, which is the producer of motorcycle tires with the brand name of "Thunderbird", PT Surya Raya Rubberindo, hichs also a producer of motorcycle tires, PT Sumi Rubber Indonesia, a car and motorcycle tire producer with the brand of "Dunlop". PT Elang Perdana Tyre Industry is a new producer of car tire using Dutch technology.

The largest producer of tires in the country in term of capacity is PT Gajah Tunggal (GT), which has an annual capacity to produce 11.1 million units of car tire and 9.2 million units of motorcycle tire. PT Gajah Tunggal, originally named NV Perusahaan Pabrik Karet "Hok Thay Hin" was established in 1951. Its name was changed in 1961 with PT Gajah Tunggal. The company has a car factory staring operation in Tangerang, Banten, in 1978. The company with the status of domestic investment (PMDN) facility started producing motorcycle tires in 1972 with an annual capacity of 6.6...

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