Tire maker Cheng Shin Rubber Industry Co (正新橡膠) yesterday said it is investing US$300 million to build a plant in Indonesia.
Construction of the new plant is scheduled to start early next year and the facility is expected to begin production at the end of the year.
The investment is aimed at the Indonesian market rather than exports, Cheng Shin president Wally Chen (陳榮華) said at the company’s annual general meeting in Changhwa County.
Chen said the size of the motorcycle and car market in Indonesia is growing rapidly, prompting Cheng Shin’s clients there to ask the Taiwanese supplier to open a local production line.
Chen told shareholders that Cheng Shin is planning to use the Indonesian market as a springboard to enter other Muslim markets.
Cheng Shin vice president Wu Hsuan-miao (吳軒妙) said the company would launch a fund-raising campaign to pay for the Indonesia investment.
He said after the factory in Indonesia becomes operational, Cheng Shin will have a broader global production base in Asia, with its other plants in Taiwan, China, Vietnam and Thailand.
Wu said the company also plans to expand the production capacity of a plant it operates in Taiwan’s Yunlin County, as well as its factories in China’s Xiamen, Zhangzhou and Chongqing by the end of this year.
He said that due to the expansion at the factories, Cheng Shin is expecting to spend US$500 million to US$600 million on capital expenditure this year.
Cheng Shin said that after years of efforts, the company has secured orders from emerging markets, including from Tata Motors Ltd, Maruti Suzuki Ltd, and Mahindra and Mahindra Ltd of India, while it has also won orders from Nissan Motor Co’s plant in Mexico.
Meanwhile, Cheng Shin’s shareholders yesterday approved a proposal to pay a NT$3 cash dividend after the company posted NT$5.72 in earnings per share last year.
The company’s board also elected vice chairman Lo Tsai-jen (羅才仁) as the thr firm’s new chairman. He is the son of the company’s founder Lo Chieh (羅結).
In the first quarter of this year, Cheng Shin posted earnings per share of NT$1.13, compared with NT$1.31 in the same period last year.
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