Indonesia urges Toyota to move regional production hub from Thailand

Indonesia's Finance Minister Purbaya Yudhi Sadewa has called on Toyota to relocate its regional manufacturing hub from Thailand to Indonesia, offering potential incentives to make the Southeast Asian nation a more attractive production base. Speaking at the Gaikindo Indonesia International Automotive Conference (GIAC) in Tangerang, Banten, Purbaya expressed Indonesia's desire for Toyota to establish its primary manufacturing base within the country.

He stated that Indonesia would provide all the necessary incentives, according to local media reports. Purbaya questioned why Thailand currently serves as the region's automotive manufacturing hub, despite Indonesia being Southeast Asia's largest and most populous economy. "We are the biggest country in Southeast Asia. Why is the region's automotive manufacturing hub in Thailand?" he questioned.

Thailand has developed a robust automotive industry over the years, with robust support from an extensive network of parts suppliers, allied industries, and export infrastructure. The country has become a significant production and export base for Japanese automakers, including Toyota. Purbaya acknowledged Thailand's historical advantage over Indonesia in attracting automotive investment.

He attributed a part of this gap to Indonesia's less competitive investment incentives. To bridge this gap, Jakarta aims to simplify business licensing processes and offer more competitive incentives to automotive manufacturers. The government also seeks to attract Toyota's broader supply chain, comprising manufacturers of steel, electronics, chemicals, and automotive components.

Purbaya emphasized that developing these upstream industries would fortify Indonesia's domestic supply chain and diminish the nation's dependence on imported components. While Indonesia currently hosts Toyota production facilities and a network of automotive suppliers, the government aims to expand the country's role in regional vehicle manufacturing to compete with Thailand for new investment, especially in electric vehicles and related sectors.