Tyre manufacturer Pirelli is set open its first factory in Indonesia after agreeing a $90 million (£56.5 million) joint venture with component maker Astra Otoparts.
The Italian firm will hold a controlling 60 per cent stake in the facility, which will be able to produce seven million motorcycle tyres a year. ]Production is expected to begin in 2013 and reach full operation by 2016.
"This deal is in line with our vision to attract new investment and we are very happy a big name like Pirelli has chosen Astra Otoparts in Indonesia," Astra Otoparts director Robby Sani told the Associated Free Press.
"Indonesia is the right place for Pirelli because they can produce tyres at a low cost here. We expect the domestic market to take around two million units a year, and the rest can be exported."
Motorcycle sales in Indonesia are expected to surpass around 8.22 million units this year, a rise of ten per cent from 2010.
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Posted by Danielle Barge