Under the collaboration agreement between the two companies, PT Inka will fund the land and buildings while Stadler will provide technology and machinery. An 84-hectare site has been secured for the plant, although only 12 hectares will be required for the initial stage.

An investment of Rupiah 500bn ($US 27m) is planned in the first phase.

PT Inka says the two suppliers plan to establish a joint venture but intend to segment the markets served by the new facility. PT Inka will therefore focus on locomotive and rolling stock orders from “low capital markets demanding good quality,” such as Bangladesh, Sri Lanka, India and the Philippines. Stadler will target sales in “high capital, high quality” markets such as Singapore, Taiwan (where Stadler has already bid for contracts) and Australia.

A groundbreaking ceremony is scheduled for January 24, subject to the granting of a construction permit. PT Inka says it expects construction of the buildings to be completed by the end of the year and the site will be ready to begin operating by the middle of 2020.