Bosch has announced plans to open its first factory in Indonesia next year to tap into a region it believes will see explosive growth in coming years.

It is investing an initial €10 million (RM 41.5 million or USD 13 million) for the facility located in the greater Jakarta area which will make automotive products mainly for Japanese car makers with operations in Indonesia. The firm plans to employ over 120 workers in the next three years.

"The planned production facility will be a much-anticipated milestone to our operations in Indonesia, and for the expansion of our footprint in South-East Asia," said Bosch president for South-East Asia Martin Hayes. He is also Bosch managing director in Malaysia and Singapore.

"South-East Asia is the fastest-growing region for Bosch, and expanding our manufacturing capabilities in this region underscores the growth potential that we see in this part of the world."

Bosch estimates that by 2016, the total production volume by Japanese carmakers in emerging economies will surpass production volume in developed countries, with the highest growth occurring in South-East Asia.

"Japanese companies and also other global car manufacturers are increasing their capital expenditures overseas, particularly in emerging economies like Indonesia," said Bosch president for Japan Herbert Hemming.

According to the Indonesian Automotive Industry Association, the country experienced an 18% growth in car sales in the first quarter of 2013.

"As the fourth most populated country in the world with strong domestic demand and rising affluence, Indonesia is fast becoming a market that seeks high quality products," said Bosch managing director for Indonesia Rudy Karimun.

"We started our activities in Indonesia from 1922. Our new production facility will be in good proximity to support manufacturers in supplying them with cutting-edge automotive technologies."