South Korean electronics giant LG Electronics has merged its two local arms here -- PT LG Electronics Indonesia (LGEIN) and PT LG Electronics Display Devices Indonesia (LGEDI) -- into LGEIN, and plans to invest an additional US$40 million this year.

LGEIN president director Lee Kee Ju said during Saturday's signing ceremony for the merger that the company's move was to lead the domestic electronic market.

"It is also to develop stronger capital, as well as to improve operational efficiency," he said.

The merger will help the company increase its export sales to an estimated $1.57 billion, slightly higher than last year's $1.43 billion.

LGEIN has two plants in Cibitung, Bekasi regency, and Cirarab, Tangerang regency. The two plants exported 95 percent and 30 percent of their products, respectively. After the merger, LG will export 75 percent of both plants' output.

Ministry of Industry spokesman Hartono said the ministry has targeted exports of electronic devices, including those produced by LG, to reach $6.95 billion this year.

In terms of additional investment, LG will allocate $18 million in fresh funds to its Cibitung plant and the remaining $22 million for its Cirarab plant. The additional investment increases LGEIN's total investment to $212 million.

The company hopes to make Indonesia its second biggest base after China in the next two or three years.

Industry Minister Fahmi Idris, who attended the ceremony, gave credit to LGEIN for the company's efforts in focusing on exports and gradually increasing its investment and improving productivity.