Material Center Becomes Local Automotive Industry Growth Solution

VIVA – The Ministry of Industry (Kemenperin) continues to commit and collaborate with many parties to fulfill the availability of raw materials at competitive prices to help the growth of local Small and Medium Industry (IKM) centers in competitiveness, especially in automotive industry. 

Director General of Small, Medium, and Miscellaneous Industries (IKMA), Ministry of Industry, Reni Yanita, said that material centers play an important role in optimizing the supply of raw materials for IKM.

"Material centers play an important role in optimizing the supply of raw materials for IKM, as well as helping to increase the competitiveness of IKM. So, they can enter the national industrial supply chain, while expanding employment opportunities for people around the centers," Reni Yanita remarked on the launch of the development of material centers in Majalengka, West Java, on November 17, 2022.

The Ministry of Industry through IKMA initiated the formation of a material center as a center for procuring raw materials for Majalengka and surrounding IKM (Karawang, Cikarang, Bekasi).

"Previously, in 2018, the Directorate General of IKMA together with the Tegal Regency Government had also operated a material center located in LIK (Small Industry Environment) Takaru, Tegal Regency, Central Java, to provide metal raw materials for the automotive component of IKM," Reni Yanita remarked.

Seeing the rapid development of the material center in Tegal, in 2022, the Directorate General of IKMA also collaborated with the Majalengka Regency Industry and Trade Office to develop a material center at the Majalengka Small and Medium Industry Center (SIKIM).

According to Reni, this collaboration is one of the implementations of the memorandum of understanding signed by the Minister of Industry and the Chairman of KADIN on November 1, 2022, related to Link and Match in the framework of IKM partnerships with large industries.

"The partnership also starts in the procurement of raw materials needed by IKM," Reni Yanita remarked.

Meanwhile, the Majalengka IKM material center being developed is currently located in Block A of the SIKIM Majalengka Area on Jalan Lingkar Utara, Cikasarung, Majalengka, Majalengka Regency.

SIKIM Majalengka consists of 12-unit blocks (A1-A4, B1-B4, C1-C4) with a building area of approximately 700 square meters. SIKIM Majalengka was officially completed and can be used at the end of December 2021.

"Currently, SIKIM Majalengka is almost fully occupied by the majority of IKM from the Automotive Component Small and Medium Industry Association (PIKKO). With this material center at SIKIM, we hope that IKM in Majalengka can be integrated and more easily collaborate to move forward together," Reni Yanita remarked.

This policy encourages the transportation equipment industry to enter the four industrial sectors with the greatest growth in the third quarter of 2022, which amounted to 10.26 percent.

"On the other side, to increase the competitiveness of the automotive industry, the Ministry of Industry through the Directorate General of IKMA is taking steps to strengthen institutional capacity. This is reflected in the development of material centers, one is the material center in the SIKIM Majalengka environment," she explained.

Reni added, to realize the ease of accessing quality raw materials at competitive prices, commitment and collaboration from all parties are needed so that the domestic industry, especially SMEs, can provide quality and competitive automotive components.

"As one of the main sectors, the Ministry of Industry continues to boost the growth of the automotive industry. So, it can make a greater contribution to the national economy," She added.

From the battery-based electric motorized vehicle (KBLBB) sector, the government is optimistic that it can produce up to 2 million units of electric motorcycles soon.

Meanwhile, the Indonesian Automotive Industry Association (GAIKINDO) estimates that sales of four-wheeled vehicles (R4) will reach 950,000 units in 2022. In addition, based on projections by the Indonesian Motorcycle Industry Association (AISI), sales of two-wheeled motorized vehicles (R2) could reach 5.1 - 5.4 million units in 2022.

Reni revealed that the management of the material center in Majalengka is planned to follow the scheme that was implemented in Tegal. In the future, there will be several partners who are ready to supply raw materials.

"Hopefully, the Majalengka Material Center will not only be able to supply steel raw materials, but also plastic, aluminum, rubber, chemical crome, and others according to the needs of the IKM production process," Reni Yanita remarked.