INDONESIA: Weakening rupiah to boost Gajah Tunggal's exports

Exports currently make up around 30 percent of the company's total sales, with America its biggest export destination, followed by the Middle East, Asia, Europe and other regions. So far, Gajah Tunggal's exports only consist of tires for passenger cars and commercial vehicles, while sales of motorcycle tires are still aimed at the domestic market.

Catharina said the firm would soon begin exporting tires for motorcycles as well, starting with Asian countries. "We estimate that the export contribution will be more than 30 percent, though only slightly,” she said.

Friday (6 Sept. 2013) saw the rupiah continue to weaken against the dollar, with the Jakarta Interbank Spot Dollar Rate standing at 11,200 per USD dollar, down from 11,125 the previous day.

Gajah Tunggal's optimism over exports was echoed by Aziz Pane, chairman of the Indonesian Tire Producers Association (APBI). Aziz said separately that exports would also be supported by improvements in the European market.

Meanwhile, Gajah Tunggal's latest financial report showed that its exports amounted to Rp 1.89 trillion (USD 169.1 million) in the first half. Despite selling a higher volume of tires than the same period last year, its revenue dropped 3.7 percent to Rp 6.13 trillion and its net profits declined 12.7 percent to Rp 459.51 billion due to rising costs.

This year, Gajah Tunggal expects to post a 4 to 6 percent rise in revenue to around Rp 13.33 trillion, by boosting its sales volume without jacking up its price tags.

Gajah Tunggal's finance director, Kisyuwono, said the company was looking to book total sales of 38 million tires for passenger cars, commercial vehicles and motorcycles in 2013.

He said part of the sales increase was expected to come from the highly anticipated, low-cost, green cars, as it has signed partnership agreements with PT Toyota Astra Motor and PT Astra Daihatsu Motor to provide tires for their Agya and Ayla cars, respectively.

However, Catharina said no specific volume order or time schedule had been set for the production of the two car brands.

Gajah Tunggal plans to allocate up to USD 120 million in its 2014 capital expenditure budget, with USD 40 million of the figure to be set aside to finance the construction of a proving ground facility on a 65-hectare site in Karawang, West Java.

Gajah Tunggal president director Christopher Chan said the facility would hopefully assist the company in establishing better business relations with automotive companies, as the latter could use the proving ground to test their vehicles.

Source: Daily "The Jakarta Post", Jakarta; 7 Sept 2013(Syed Rashid Ali, Karachi, Pakistan)