Italian tyre maker Pirelli is planning to build a new $126m tyre manufacturing plant in Indonesia, following the approval from the country's Investment Coordinating Board (BKPM).

Pirelli had signed a deal in 2011 with component maker Astra Otoparts to build its first tyre manufacturing plant in Indonesia aimed at producing motorcycle tires for local and ASEAN markets.

According to the company, construction is expected to start in late 2012, with scheduled production from 2013 and full operation in 2016.

Pirelli said that the facility is expected to have a production capacity of 7 million motorcycle tires per year.

The tyre maker has also acquired Swedish tyre distributor Dackia Holding to further have its presence in Nordic markets of winter tyres.