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The plant was expected to start operations in April 2017 with a production capacity of 160,000 units per year, and to cost an estimated ¥60 billion ($500 million), MMC said on Friday February 27.

It will be operated through a new joint-venture company called Mitsubishi Motors Krama Yudha Indonesia (MMKI), which will be controlled by MMC via a 51% stake. Parent group Mitsubishi Corp will hold 40%, and Indonesian partner Krama Yudha will have 9%.

The three parties have been manufacturing vehicles in Indonesia since 1970, with cumulative sales of 1.3 million units as of the end of 2014, MMC said.

“Indonesia has the fourth-largest population in the world and further growth in the automobile market is expected as the economy continues to grow,” the carmaker said.

“In this context, developing the partnership’s passenger car business in addition to the current light commercial vehicle business has become a necessity, in order to effectively respond to the coming demand increase in Indonesia,” it added.

In addition to vehicles already produced locally, such as the Colt L300, the new plant will also assemble a new small multi-purpose vehicle (MPV) model and an all-new Pajero Sport.

“A portion of those vehicles will be exported to other Asean countries, and the plant is expected to play a very important role as the second-largest production site for MMC vehicles in the Asean region [after] the Laem Chabang plant in Thailand,” the company said.

The plant will be located on the GIIC Industrial Estate in Bekasi, West Java, 37km east of Jakarta, according to MMC.

The carmaker also intends to continue working on new assembly plants and to launch new car models in the region, it said.

It recently started operations at a new, 50,000 units-per-year plant in the Philippines, which replaced a facility that was able to manufacture 30,000 vehicles per year.

“The aim of these strategies is to achieve growth in profits by utilising Asean production capabilities to fill each country’s needs,” it said.

Announcement of MMC’s new plant in Indonesia, which had been expected late last year, came weeks after US automotive major General Motors and China’s state-owned SAIC Motor announced plans to set up a joint venture in Indonesia.