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Russian Uraltrac equipment to enter Indonesia
Thu, 06/05/2008 10:12 AM |
Business
Tuesday, 10 June 2008 | Indonesia Go Id
Minang Jordanindo, an
Indonesian-Jordanian joint venture company, invited a group
of Indonesian journalists, including The Jakarta Post's
Vincent Lingga,
to witness the signing of its business deals and visit the
the 220-hectare Uraltrac industrial complex in Chelyabinsk
in the last week of May on the occasion of Uraltrac's 75th
anniversary celebration on June 1.
ChTZ Uraltrac Ltd, one of Russia's largest
manufacturers of tractors, bulldozers, pipelayers and
engines, will soon enter Indonesia in an attempt to break
into the heavy equipment market, which is now dominated by
Komatsu, Caterpillar and Hitachi.
Uraltrac's 10-ton capacity B10MB bulldozer is
now on its way to Sangata, Kutai Timur regency, in East
Kalimantan. The 25-ton capacity D320 and 106-ton T-800
bulldozers will follow a few months later to meet the demand
boom fueled by sky-high commodity prices.
The units will form the first batch of heavy
equipment ordered by PT Minang Jordanindo, which also plans
to eventually assemble several types of Uraltrac equipment
in E. Kalimantan that has now become one of the world's
largest coal producers and a major oil palm plantation
center.
Minang Jordanindo, an Indonesian-Jordanian
joint venture company, invited a group of Indonesian
journalists, including The Jakarta Post's Vincent Lingga, to
witness the signing of its business deals and visit the
220-hectare Uraltrac industrial complex in Chelyabinsk in
the last week of May on the occasion of Uraltrac's 75th
anniversary celebration on June 1.
The following is his report:
The mining and agricultural commodity market
boom since the second half of 2006, combined with massive
infrastructure development projects, started it all.
The demand for heavy equipment has become so
strong that buyers often wait up to one year for delivery
from traditional suppliers in the United States and Japan,
but have to pay in advance to secure delivery.
This was the opportunity that prompted Minang
Jordanindo, which has a long experience in reconditioning
and selling used heavy equipment, to seek new suppliers.
Hence, emerged Uraltrac, virtually unknown in
Indonesia, but one of Russia's largest manufacturers of
heavy equipment and a long-time major supplier in East
Europe, Africa, the Middle East and several Asian and Latin
American countries.
"I realize it is an uphill challenge to bring
in this new brand to our highly competitive market, but I
see a great opportunity not only because Uraltrac guarantees
deliveries within three to four months but most importantly
due to its strong commitment to transfer technology," said
Bonny Z. Minang, chairman of Minang Jordanindo.
The contract between Uraltrac and Minang
Jordanindo was one of the four trade and investment deals
between Russian and Indonesian companies signed in Jakarta
early last September in the presence of then President
Vladimir Putin and President Susilo Bambang Yudhoyono.
So highly confident have been Minang
Jordanindo and Uraltrac that they have even started planning
a joint-venture assembly plant despite having yet to make
the first equipment delivery.
"In so far as our relationships with Uraltrac
are concerned, Minang Jordanindo is not a mere dealer in the
real sense of the word. We have gained Uraltrac's commitment
to transfer technology through training and investment right
from the outset of our talks," Bonny added.
He said Minang Jordanindo had prepared a
30-hectare plot of land on the bank of the Mahakam river in
Kutai for its assembly plant and training center complex.
Uraltrac's chief executive officer Valeriy
Platonov acknowledged that ChTZ brand name was still unknown
in Indonesia's heavy equipment market, but he asserted his
products have been quite popular in more than 30 countries
for their high technical performance, relatively low prices
and the reliability of repair service support and
availability of spare parts.
"We are the first to manufacture
diesel-electric tractors, which can secure a high technical
performance and guarantee a steady, continuous power supply.
Yet, most important, we always commit to excellence in all
our products ," Platonov said.
"Don't' ask me about the performance of our
tractors, but talk to our dealers who are here for our 75th
anniversary," added Uraltrac's deputy director for
international marketing Vladimir O. Klein.
Uraltrac, which has an annual production
capacity of 4,000 units of various types of tractors,
bulldozers, pipe-layers and engines, invited 90 dealers from
Russia and foreign countries to the anniversary celebration
and to look at its new products.
Indonesia's ambassador designate to Russia
Hamid Awaludin considered the Minang Jordanindo-Uraltrac
business deal a visionary agreement because it involved not
only trading but, most importantly, the transfer of
technology and expertise to Indonesia.
"Russia has high a technology capability,
expertise and a huge sum of international reserves to invest
overseas, and Indonesia needs a lot of capital and heavy
machinery to explore and develop its rich natural resources.
This is a strategic synergy," added Hamid, who also attended
Uraltrac's anniversary celebration and visited its product
exhibition in Chelyabinsk.
Hamid said economic relations therefore would
be the focus of his attention in Russia as both countries
have all the fundamental prerequisites for mutually
beneficial relationships.
Uraltrac, which operates foundry, forging
press, welding, machining, coating and thermal and galvanic
production units, paraded and displayed several of its
products, including its first tractor called Stalinets 60
made in 1933 and a Stalinets-2 military tank made in 1939,
both of which ran well.
Alexander C. Setjadi, senior vice president
for asset-based finance at Bank Danamon, one of the largest
lenders to heavy equipment users in Indonesia, emphasized
the crucial role of high technical performance, reliability
and after-sales service in the marketing of heavy equipment.
Since the price tags of heavy equipment range
from US$100,000 to $2.5 million per unit, credit financing
is always an integrated part of the transaction. Banks or
finance companies will not be willing to finance equipment
that cannot show high technical performance, Setjadi added.
"Certainly banks will not finance a machinery
that has a lot of down time because that will affect the
commercial viability of the whole project," he said, adding
that the first batch of Uraltrac bulldozers to enter
Indonesia should be able to demonstrate excellent
performance to gain user confidence.
Setjadi and Bank Mega's credit officer
Michael A attended Uraltrac's 75th anniversary celebration
in light of exploring lending opportunities generated by the
Russian company's entrance to the Indonesian market.
PT Kutai Timur Energy, a general trading and
mining company owned by the Kutai Timur regency
administration, will be the first operator of the first
three Uraltrac bulldozers.
Quick delivery, competitive prices and a firm
guarantee of after sales service are the main factors that
have prompted Kutai Timur Energy to make the plunge to buy
Uraltract's bulldozers from Minang Jordanindo.
The waiting time for new purchases now often
takes up to one year while "we need many of them urgently
for our natural resource development projects," Kutai Timur
Energy's president Anung Nugroho said.
Anung expressed high confidence in Uraltrac's
competitive advantage in the Indonesian market after
inspecting its production and quality-control process.
"I am especially optimistic because all of
the equipment I ordered will be supported by a comprehensive
technical assistance package directly from Uraltrac," Anung
added.
Setjadi pointed to the dramatic growth in
Indonesia's heavy equipment market due to the massive
expansion in oil plantations in various provinces and coal
mining in Kalimantan.
"I think our heavy-machinery market will
expand this year to around 10,000 units from about 7,000 to
8,000 units last year due to the big increase in demand from
the mining, plantation and infrastructure development
sectors. Our oil palm and pulp plantations alone will expand
by around 1.2 million hectares this year."
Setjadi said Bank Danamon expected to
increase its lending portfolio in heavy equipment and other
asset-based financing this year to Rp 4 trillion from Rp 3
trillion last year.
The market is almost 70 percent controlled by
Komatsu and Caterpillar with the remainder shared by many
other brands from South Korea and China.
But Bonny was highly confident about making a
significant dent on the market, especially as the domestic
demand for heavy machinery will continue to expand and the
prices of Uraltrac's equipment are on average 30 percent
lower than those of its competitors in Japan and the United
States.
"Uraltract's strong commitment to transfer of
technology to Minang Jordanindo through technical assistance
and eventual joint-venture assembling and manufacturing will
make our business deal outstandingly different from our
traditional heavy equipment suppliers," Bonny added.
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