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Jakarta Post
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Foxconn may spend $10 billion on factories: Minister

  • Linda Yulisman

    The Jakarta Post

Jakarta | Sat, July 21 2012 | 01:06 pm

Foxconn Technology Group, subsidiary of Taiwan based Hon Hai Precision Industry Ltd., may spend between US$8 billion and $10 billion over the next five years to set up manufacturing centers in Indonesia, says Industry Minister M.S. Hidayat.

Foxconn is the world’s biggest electronics manufacturer with major clients such as Apple Inc., Dell Inc. and Microsoft Corporation. According to the New York Times, the company is responsible for 40 percent of global electronics output.

Hon Hai founder and Foxconn CEO Terry Gou met President Susilo Bambang Yudhoyono last week as a courtesy prior to unveiling the company’s investment plan in Indonesia.

Hidayat said a team of officials from his ministry, the trade ministry and the Investment Coordinating Board (BKPM) would travel to Taipei to discuss procedures for implementation of the plan.

“Foxconn has conducted a feasibility study,” Hidayat said.

The company, he said, would need around 1,000 hectares of land to set up production facilities. Hidayat declined to specify exact locations, but hinted that it would be difficult to build the facilities outside Java, the country’s most-populous island, and a home to many major industrial plants.

Trade Minister Gita Wirjawan said the company would invest in all six economic corridors specified in the government’s Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI): Sumatra, Java, Kalimantan, Sulawesi, Bali–Nusa Tenggara and Papua–Maluku.

Foxconn wanted to establish electronics factories in several areas with different production capacities, said Gita who met with Gou and his executives in June.

Gita, who formerly chaired BKPM, said that Indonesia would likely serve as Foxconn’s manufacturing base in Southeast Asia when the investment took place.

“If the feasibility study shows positive results, it’s possible that Indonesia will serve as a production base for the firm,” he told reporters at his office on Friday.

Earlier, Darwin Lie, market analyst for the International Data Corporation (IDC), pointed out the feasibility of Indonesia becoming Foxconn’s production hub for Asia and Australia with its strategic
position between the continents.

Foxconn’s entry to Indonesia may have a significant impact on the country’s technology industry by cutting prices of certain devices, Darwin said.

Founded by Gou in 1974, Foxconn is headquartered in Taiwan and operates a number of factories in Asia, America and Europe. The company is the biggest private employer in China, with more than 1.2 million workers.

Earlier this year, Foxconn announced its plan to boost production of Apple products in five factories in Brazil, to meet rising demand for iPhones and iPads.

Analysts said rising labor costs in China had prompted Foxconn to look elsewhere for expansion. Previously, the company considered expanding its facilities in Brazil, boasting a total investment of $12 billion over five to six years, its largest overseas investment ever.

By the end of September, however, reports claimed that the much-hyped deal was in doubt due to stagnant negotiations over tax breaks and other special treatments.

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