Taiwan tyre manufacturer Cheng Shin Rubber Industry plans to build a new tyre plant in Indonesia to supply the fast expanding passenger car and motorcycle markets in South-east Asia.

The company plans to increase its investment in the country to US$320m, from $80m, in a move that also allows it to diversify further from mainland China, where labour costs are rising rapidly.

The company currently has manufacturing operations in Taiwan, China, Thailand and Vietnam and sells its tyres under the CST brand.

The new plant in Indonesia is scheduled to come on stream in 2015 and will be 30% internally funded and 70% from bank loans.

Indonesia has South-east Asia’s largest motorcycle market, with 6.51m units sold in the first 10 months of 2013, and the region’s second largest vehicle market, with sales of 1.02m units in the same period.