Heavy Industry

Heavy industry in the country has grown significantly in recent years. This is in line with the rapid growth of the industrial sectors that use heavy equipment

Particularly the mining, agribusiness, construction and forestry sectors.

  • In 2012, nationwide sales of heavy equipment reached 21,000 units and were expected to rise to 27,841 units in 2013.
  • Imported products account for about 45% of the heavy equipment market in Indonesia
  • The biggest buyer of heavy equipment is mining sector, accounting for 60 percent of total sales.
  • A number of world’s top heavy equipment manufacturers have built factories in Indonesia, including from Japan, South Korea and China.
  • Indonesia’s construction equipment market value is forecasted to reach US$6.84 billion by 2017.

 

 

 

Demand for heavy equipment remains strong as it is driven by global demand for commodities. In the mining sector, increased demand for heavy equipment primarily comes from the mining of commodities such as coal and metals that include nickel, tin, iron or gold. Demand for heavy equipment has increased in the agribusiness sector as well, particularly on palm oil plantations. Crude Palm Oil (CPO) is growing in demand in both the domestic and international markets. Indonesia and Malaysia are by far the world’s largest producers of palm oil, together accounting for 85.7% of global production. The rapid increase in demand for crude palm oil (CPO) has encouraged companies to expand and open new plantations.

 

Construction Sector

The construction sector is one of the highest priorities for Indonesia’s government. It has planned large-scale infrastructure projects in five priority sectors: transportation, gas pipelines, electric power, water supply resources, and telecommunications. These projects are designed to attract foreign investment and boost annual economic growth. In the forestry sector, pulp producers are urged to reduce the exploitation of natural forests and focus in activities. The expansion of acacia plantations has also driven an increase in sales of forestry equipment. In 2012, nationwide sales for heavy equipment reached 21,000 units. Capricorn Indonesia Consult estimated that sales would rise to 27,841 units in 2013.

Seeing the prospects, business players have prepared strategies to take advantage of every opportunity for expansion by expanding their types of products, opening new branches, launching innovations and improving after-sales services. According to the Indonesian Association of Heavy Equipment Companies, imported products account for 45% of the heavy equipment market and local products hold the majority share of 55%.

 

World ‘s Top Heavy Equipment

A number of the world’s top heavy equipment manufacturers have built factories in Indonesia, such as those from Japan, South Korea and China, including SUMITOMO, DOOSAN, and SANY. Some Japanese investors also plan relocate their manufacturing operations to Indonesia. Rising demand for heavy equipment in the country attracts heavy equipment producers such as SANY Heavy Industry Co. from China Ltd., which will invest US$200 million to increase its production capacity. The SANY Group plans to make Indonesia their center for heavy equipment production in order to meet market demand in the ASEAN, Japan and Australia.

World Market Intelligence predicted that the value of Indonesia’s construction equipment market will reach US$6.84 billion by 2017, up from an estimated US$4.2 billion in 2012. This is in line with the growth of the construction sector in Indonesia, which typically increases 7-8 percent per year.  

You can continue reading about…

First steps and characteristics of doing business in Indonesia

Czech companies at InaGreen Tech fair in Jakarta, Indonesia

 

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