Indonesia set to build $116M vehicle test site to capture ASEAN market

INDONESIA’S transportation ministry aims to finish building a 1.64 trillion rupiah (US$116.5 million), international standard motor vehicle “proving ground” within the next four years to help Indonesian automakers capture the Southeast Asian market.

Minister Budi Karya Sumadi showed a project road map whereby the proving ground – a racetrack-like site to be built in Bekasi, West Java – was slated to begin development in 2022 and be finished by 2024.

The proving ground will test Indonesia-made motorcycles, threewheelers, cars, buses and trucks in accordance with the international benchmark UN Regulation (UNR) on vehicles, to make them more compliant with other markets’ standards, particularly the ASEAN market.

“[Indonesia] produces a lot [of cars], we use a lot of cars but we don’t export as much,” said the minister during a Jakpost Spotlight webinar titled “Improving vehicle safety in Indonesia through proving ground”, held on December 10.

Indonesian automakers exported 180,903 completely built up ( CBU) vehicles this year as of October, which represented a third of total vehicle production as of that month, according to Association of Indonesian Automotive Manufacturers (Gaikindo) data.

However, Gaik indo a ims to push ex por ts up to one mil lion units a nd domestic sa les to t wo mil lion units by 2025 aga inst t he backdrop of a cooling Indonesia n auto market as big cit ies, i ncluding Ja ka r ta, choke up wit h pr ivate vehicles.

For the government, raising vehicle exports is a means of strengthening Indonesia’s trade surplus, which hit $17.07 billion from January to October this year, according to Statistics Indonesia (BPS). The surplus supports the rupiah exchange rate and boosts the country’s economic recovery.

Indonesia’s main competitor for the Southeast Asian auto market is Thailand, but Vietnam, the region’s rising economic star, recently signalled plans to go global after Vietnamese automaker VinFast acquired a proving ground in Australia, which Gaikindo expects will tighten regional competition going forward.

The ministry’s land transportation director general, Budi Setiyadi, explained that the planned proving ground would add 19 new testing facilities to the ministry’s existing vehicle testing site (BPLJSKB) in Bekasi.

The new facilities will test, among other aspects, vehicle emissions, noise levels, crash safety and mirror view in accordance with the UNR, a standard universally recognised by Southeast Asian countries through the ASEAN Mutual Recognition Arrangements (MRA).

Budy said: “At the least there will be trust from other countries over products made in Indonesia.”

He added that “there are other [proving grounds] in ASEAN but ours will be the biggest” at 90ha. The second biggest in the region will be that in Thailand, according to ministry data.