Mostly thanks to Japanese firms expanding production capacity at their factories in Indonesia at a time when the Japanese yen is rising against the U.S. dollar, Taiwan’s machine tool suppliers have seen their exports to Indonesia soar significantly so far in 2012 from to a year ago.

For the past 10 months of 2012, Taiwan’s overall machinery exports amounted to US$16.9303 billion, slightly down 1.3% from the same period of 2011, with machine tools contributing US$3.59648 billion to the total, up 9.2% year on year. During the period, exports of machine tools to Indonesia surged 23.5% to US$101.673 million to account for 2.8% of the total, making the Southeast Asian country the industry’s six-largest export outlet.

The banner growth in Taiwan’s machine-tool exports to Indonesia, Taiwan Association of Machinery Industry (TAMI) indicated, is mainly attributable to Japanese firms’ growing procurements for new machinery used to expand production capacity in the country, which is especially significant at a time when the Japanese yen against the greenback has trended upward.

TAMI pointed out that Japanese firms, in fact, have tended to introduce factory equipment into their overseas manufacturing bases exclusively from their country. This has made it difficult for Taiwanese machine tool suppliers to explore the Indonesian market, where development of local industries mostly relies on investments from Japan.

However, the abovementioned situation is changing in 2012, TAMI said, for stronger Japanese yen seen so far this year has forced Japanese companies running factories in Indonesia to buy more machinery from Taiwan to cut costs, allowing Taiwanese machine tool makers a precious chance to achieve a bigger share of the Southeast Asian market.

To further fuel their exports to Indonesia, TAMI noted, more industry insiders have moved to take part in local trade fairs, and appealed the Taiwanese government to begin talks with the country for lifting bilateral trade barriers. Presently, imported machinery in Indonesia is subject to a 5% tariff.