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Dawn of Industrialisation? The Indonesian Automotive Industry

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  • Kaoru Natsuda
  • Kozo Otsuka
  • John Thoburn

Abstract

This article traces the development of industrial policy towards the Indonesian motor industry within the automotive global value chain. Showing the current dominance of Japanese motor assemblers in Indonesia, it notes the rather undeveloped nature of the locally owned supporting industry, particularly compared with that of neighbouring Thailand. Most investment in auto-parts production has been by foreigners. Nevertheless, Indonesia's rapid domestic-market growth has allowed it to attract foreign automotive investment without having to offer excessively generous incentives. While the continued entry of foreign suppliers of auto parts into Indonesia offers opportunities for local suppliers to upgrade their productive capabilities, it also limits their chances of becoming first-tier suppliers themselves. Japanese automotive investors are optimistic about Indonesia's export potential, more so than Malaysia's.

Suggested Citation

  • Kaoru Natsuda & Kozo Otsuka & John Thoburn, 2015. "Dawn of Industrialisation? The Indonesian Automotive Industry," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 51(1), pages 47-68, April.
    • Handle: RePEc:taf:bindes:v:51:y:2015:i:1:p:47-68
    DOI: 10.1080/00074918.2015.1016567
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    References listed on IDEAS

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    1. Peter Nolan, 2012. "Is China Buying the World?," Challenge, Taylor & Francis Journals, vol. 55(2), pages 108-118.
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    Cited by:

    1. Palma, J. & Pincus, J., 2022. "Is Southeast Asia falling into a Latin American style “middle-income trap†?," Cambridge Working Papers in Economics 2267, Faculty of Economics, University of Cambridge.
    2. Tom Barnes, 2017. "Industry policy in Asia’s demographic giants: China, India and Indonesia compared," The Economic and Labour Relations Review, , vol. 28(2), pages 218-233, June.
    3. Kozo Otsuka & Kaoru Natsuda, 2016. "The Determinants Of Total Factor Productivity In The Malaysian Automotive Industry: Are Government Policies Upgrading Technological Capacity?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-18, September.
    4. Padang Wicaksono & Lionel Priyadi, 2018. "Does Manufacturing Sophistication Lead to Higher Demand for Vocational Workers? Evidence from Indonesia," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 64, pages 59-72, Juni.

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