Toyota Motor Manufacturing Indonesia has commenced production of engines at Karawang plant in West Java.
Karawang plant has been built at a cost 2.3 trillion Indonesian Rupiah ($172m).
The plant is expected to produce at least 216,000 engines per year by employing about 400 employees.
The plant will produce 1.3 and 1.5 liter Toyota NR engines, which the company claims to be fuel efficient.
According to the company, some of these engines are for export.
Toyota already has four more plants in Indonesia, with two plants in Sunter and two more plants in Karawang. This is the third plant in Karawang.
Speaking at the plant's opening ceremony, Toyota's senior managing officer Koei Saga said: "Toyota sees TMMIN as one of our core hubs for the production and supply of both vehicles and engines."
"Through our operations here, we hope to maintain and strengthen our position as part of the local community here in Indonesia."
The Japanese car manufacturer said that it wants to achieve a sustainable growth which is a significant shift from its previous strategy of high-volume production.
It says that it wants to build plants which are safer and more environmentally friendly where innovative production techniques could be introduced.
At this plant, Toyota is introducing two major production technologies including on-site melting, which it is deploying for the first time outside Japan.
The company is introducing a smaller furnace which reduces the risks associated with transporting the molten alloy and improves safety.
By using smaller furnaces, Toyota has also been able to keep the cost at minimum.
Toyota is also introducing inorganic sand cores which will be placed inside casting molds to create cavities for final cast components.
Earlier organic materials were being used which produce tar particles and strong odors. To remove these impurities, large dust collectors and deodorizers are required.
By introducing inorganic materials, Toyota hopes to reduce the use of these dust collectors and deodorizers.
