DUE TO ANTIDUMPING SANCTIONS AND MONETARY TURMOIL, THE BICYCLE INDUSTRY IS LISTLESS.

The performance of Indonesia's bicycle industry has been low due to the antidumping sanctions from the European Union members. This condition is now worsened by the impact of the current monetary turmoil. It is said that many bicycle producers have slashed their production rates by up to 40%. As a result of the antidumping sanctions, the domestic industry of bicycles has been losing its market share. The export demand for Indonesian bicycles has continued to decline.

Out of the 29 bicycle companies existing in Indonesia with a combined production capacity of 3.06 million units/annum, only 23 currently still operate. Of these 23, only ten are members of the Indonesian Bicycle Producers' Association (AIPI)

The largest bicycle producer in Indonesia is PT Java Perdana Bicycle Industry, whose plant is located in Tangerang, West Java. Ibis company `has an annual production capacity of 400,000 units. Established in 1989, PT Java Perdana Bicycle Industry operates under the foreign investment (PMA) scheme and produces bicycle under brand name `Centurion.' According to some information, the company markets its products through a distributor called PD Asean Jaya.

The second largest bicycle producer is PT Wijaya Indonesia Makmur Bicycle Indonesia (WIM Cycle), which was established in 1972. With an annual production capacity of 360,000 units, WIM Cycle supplies some 30% of its output to Europe, another 40% to the USA, and the rest to other countries. Led by Hendra Widjaja, the company markets its product under brand name "WIM Cycle." 

PT Insera Sera --whose plant is located in Sidoarjo, East Java-- has an annual production capacity of 180,000 units. This company produces different types of bicycles such as MTB, ATB, and City Bike and markets them under brand name `Insera.' According to some information, some 50% of the company's output is exported and the rest supplied to the domestic market. 

PT Terang Dunia Internusa, which was established in 1993, has an annual production capacity of 180,000 units. With its plant located in Citeureup, Bogor, this company produces various types of bicycles under brand name "United." 

The other bicycle producers are spread over different locations and they have annual production capacities of less than 150,000 units each. 

It has been difficult for Indonesia's bicycle industries to grow because it is faced with pressures on the international market and with tight competiton on the domestic market. On the domestic market, bicycle producers have to compete not only with one another but also with home industries, which manage to offer products at relatively low prices. 

Table - 1 Several bicycle producers in Indonesia, 1996

Company                     Location of plant        Brand

PT Jaws Perdana Bicycle     Tangerang, West Java     "Sentorion"

PT Toyo Asahi Bicycle       Tangerang, West Java     "Toyo"

PT Wijaya Indonesia         Gresik, East Java        "WIM"

   Makmur Industry

PT Days Sakti               Tangerang, West Java     "Winner"

PT Insera Sena              Sidoarjo, East Java      "Insets"

PT Sinadi Sakti             Surabaya, East Java         -

PT Five Rams WBI            Gresik, East Java        "Amex","Puma"

PT Swasti Pandawa Armada    Magelang, Central Java   "Armada"

PT Terang Dunia Internusa   Bogor, West Java         "United"

PT Glantindo Utama          Tangerang, West Java     "Dignity"

Source: AIPI/Data Consult 

Production up again 

Indonesia's bicycle production has been fluctuating with the tendency to increase. For the period of 1992-1996, it grew at an average annual rate of 24.1%. In 1993, it reached 2.2 million units, which increased by 22.7% to 2.7 million units in 1994. In 1995, due to the antidumping sanctions, it declined by 52.2% to 1.3 million units. In 1996, according to a source with AIPI, Indonesia's bicycle production grew to 2,800,000 units. For 1997, due to the monetary turmoil, the bicycle industry is expected not to be able to achieve the 10% production growth target. 

Table - 2 Indonesia's bicycle production, 1992-1996

Year      Production    Growth

          (000'units)    (%)

1992         2,015          -

1993         2,156        7.7

1994         2,749       27.5

1995         1,313      -52.2

1996(*)      2,800      113.2

Average growth           24.1

(*) Tentative figures 

Source: AIPI/Data Consult 

Antidumping duties vary. 

Apparently, the European Union's antidumping accusation to Indonesia's bicycle industry has had some negative impact on its growth. This can be seen from the fact that its output has declined and that a number of bicycle producers have gone bankrupt due to failure in competition. A number of other producers have found themselves compelled to turn to other countries for export opportunities. 

PT Federal Cycle Mustika, which is affiliated to the Astra Group and produces bicycles under brand name "Federal," has discontinued production. It is said that this company has been taken over by WIM Cycle. However, no confirmation has been obtained about such a report. 

The antidumping duties applicable to Indonesian bicycle producers vary from one company to another. PT Federal Cycle Mustika and PT Toyo Asahi Bicycle Industry, for example, are subjected to a 29.4% antidumping duty, PT Jawa Perdana Bicycle 27.7%, PT Wijaya Indonesia Makmur 21.9%, and other bicycle producers an average 29%. 

Exports down 

The volume of Indonesia's bicycle exports has been fluctuating with the tendency to decline. In 1991, it reached 411.3 thousand units (worth US$ 22.2 million). For the past five years (1992-1996), it reached its peak level of 562,590 units in 1994. In the following years, due to the dumping accusation from the European Union, the volume of such exports showed drastic drops. In 1996, it reached only 223,421 units (worth US$ 14.7 million), down 58.3% from from the previous year. 

The bicycles which Indonesia exports can be divided into two major categories: racing bicycles and other bicycles. Of these two categories, the more exported is other bicycles. In 1996, as many as 222,920 units of such bicycles were exported and this figure accounted for 99.7% of the total. Only 501 units of racing bicycles were exported in 1996. 

The high impact of the European Union's dumping accusation to Indonesian bicycles is high because so far, Indonesia's bicycle industry has relied on a few countries for export opportunities, and they are the European Union, Japan, Canada, Australia, and the United States and because the European Union accounts for around 70% of Indonesia's total bicycle exports. 

Table - 3 Indonesia's bicycle exports, 1992 - 1996

Year    Volume      Value

        (unit)   (US$ '000)

1992   541,721     30,327

1993   508,296     31,203

1994   562,509     31,894

1995   535,581     31,231

1996   223,421     14,716

Source: CBS/Data Consult 

Penetrating alternative markets 

Due to the imposition of antidumping duties, a number of Indonesian bicycle producers have been trying to further its penetration into countries outside of the European Union. Among them, the ones with the highest potential to import Indonesian bicycles are Japan and the United States, where the ratio of bicycles to the population is nearly 1:1. In 1996, for example, Indonesia managed to export 52,345 units worth US$ 4.4 million to Japan. In the same year, the United States, Canada, and Saudi Arabia together imported 66,191 units, which accounted for 29.695 of Indonesia's total bicycle exports. The export opportunities for Indonesian bicycles in these three countries seem to be good. 

Table - 4 Indonesia's 1996 bicycle exports, by country of destination

Country of     Volume     Value

destination    (unit)   (US$ '000)

Japan          52,345      4,361

Netherlands    41,128      2,709

USA            36,013      2,159

England        26,817      2,026

Canada         15,517        836

Saudi Arabia   14,661        237

Australia       9,361      1,042

Denmark         4,745        173

Others         22,744      1,173

Total         223,421     14,716

Source: CBS/Data Consult

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