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Mercedes-Benz to use RI as production base

German carmaker Mercedes-Benz announced Tuesday it was considering ramping up bus production in Indonesia in the next two years to serve markets in Southeast Asia, the Middle East and Africa.

"My plan is to use Indonesia as a production base for bus markets in Southeast Asia, the Middle East and Africa. Our base in Indonesia has the technical capabilities to produce up to 9,000 buses but we need to invest in equipment," Mercedes-Benz CEO Rudi Borgenheimer said after meeting with Vice President Jusuf Kalla in Jakarta.

He said that in the next six month Mercedes-Benz would discuss and study the feasibility of the plan before beginning the investment. Borgenheimer said the company needed around 10 million euros to reach the 9,000 capacity target from the current 600 buses produced in Indonesia each year. "If we can agree then we will begin in 2010," he said.

Vice President Jusuf Kalla has expressed support for the plan, underlining that the company has been operating in the country for 38 years. "Indonesia is seen to have experience, and as the largest country in the Southeast Asian region, it has a large market," Borgenheimer said. Besides producing 600 buses, the company also produced 2,500 units of the premium C, E, and S class cars in Indonesia in 2007, double the previous year's level.

The company also urged the government to sign an economic partnership agreement (EPA) with the European Union, and then bilaterally with Germany, to allow it to compete with carmakers from Japan. "The Indonesia-Japan EPA has created many benefits for Japanese companies, including lower export tariffs. We hope that Indonesia and Germany can sign such an agreement soon so that we can be more competitive," Mercedes-Benz vice marketing director Yuniadi H. Hartono said. Kalla said he supported efforts to expedite the signing of EPAs with the EU and Germany.

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