LG chooses RI for ASEAN refrigerator production base

The Jakarta Post, Tangerang

LG Electronics Indonesia opened its second Indonesian refrigerator plant Wednesday at a cost of US$16 million in Tangerang, Banten, targeting a 160 percent increase in production to 1.5 million refrigerators this year.

LG Electronics Indonesia president Lee Kee Ju said during the opening ceremony that the siting of the new factory in Indonesia was in line with Korea-based LG Electronics Inc's intention of making Indonesia its refrigerator production base for the Asean Free Trade Area (AFTA).

"We decided to make Indonesia our refrigerator production base for AFTA due to the country's large domestic market and its high-quality workers," Lee said.

He said that productivity in Indonesia was almost 90 percent of LG's Korean factories, and was much higher than in China.

LG Electronics Indonesia general manager Bambang Supriyadi said that the new factory had a production capacity of 800,000 units per year. In 2005, the company's first refrigerator factory, also located in Tangerang, produced 960,000 units.

The company has increased its sales target for 2006 by 274 percent to $255 million after selling 654,000 refrigerators last year worth $93 million.

Lee said that for the first quarter of this year, LG Electronics Indonesia had been the market leader for refrigerators in Indonesia. Last year, LG Electronics Indonesia was number two after Sharp.

Lee said that 70 percent of the refrigerators produced in Tangerang were for export, while the rest were destined for the domestic market. This strategy had been adopted to overcome the current sluggish domestic market conditions resulting from reduced consumer purchasing power.

He added that Cuba had ordered 500,000 refrigerators from LG Electronics Indonesia.

Lee added that other regions such as Asia, the Middle East, Australia, America, and the former Soviet Union states also imported refrigerators produced by LG Electronics Indonesia.

The company's public relations head Widi Nugroho Sahib said that besides its new refrigerator plant, LG Electronics Indonesia also planned to build a television production factory this year worth $34 million in Cibitung, West Java.

Industry minister Fahmi Idris, who was in attendance at the official opening, said that the government greatly encouraged companies such as LG Electronics to invest in Indonesia as this boosted the country's economy by providing jobs and increased tax revenues.

Budi Darmadi, the Industry Ministry's director general of transportation, electronics and information & communications technology industries, said that 200 companies in the sector provided about 150,000 jobs in Indonesia. (08)
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