T

aiwan-based Foxconn Technology Group will kick off operations in Indonesia in December this year, aiming to produce 3 million cell phones in the initial phase, top government officials said recently.

Industry Minister MS Hidayat said the company’s first production facility in Indonesia would be ready in October, located in the Modern Cikande Industrial Estate in Cikande, Serang, Banten.

The industrial estate, 68 kilometers from Jakarta, has a good access to the country’s main port Tanjung Priok in North Jakarta and Soekarna-Hatta International Airport in Cengkareng, Tangerang, Banten.

The initial phase of Foxconn investment in Indonesia will absorb hundreds of million of dollars from the total investment, amounting of US$10 billion, he added.

“They will break the ground of the second phase in July 2013. The plants will be located in an area of 400 hectares,” said Trade Minister Gita Wirjawan, who held talks with Hon Hai founder and Foxconn CEO Terry Gou over the planned investment.

Gita, who recently relinquished his post as Investment Coordinating Board (BKPM) chairman said that Foxconn would allocate the largest portion of its output to the domestic market, with a smaller portion for exports.

According to Gita, Foxconn will manufacture 10 million mobile phones and other electronics items, including smart televisions and computer tablets, when the second phase of its project is completed in the next two years.

The location of the next phase of investment has not been determined, but for the long term, the firm is open to investing in all six economic corridors (Sumatra, Java, Kalimantan, Sulawesi, Bali–Nusa Tenggara and Papua–Maluku ) in the government’s Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI), particularly Sumatra and Kalimantan.

The government requests Foxconn produce medium-end mobile phones and smart phones with prices around $100 per unit to tap the country’s mobile phone market where demand is driven by the affluent middle class.

At present, Indonesia, home to 240 million people, relies heavily on imported components and finished electronics products with much of the production process stopping at mere assembly.

Around 95 percent of 45 million new mobile phones in the country each year are imported, with a value of more than $5 billion, according to an Industry Ministry estimate.

Foxconn is said to have canvassed local electronics manufacturers, including PT Hartono Istana Teknologi, a major manufacturer of consumer electronics products under the Polytron brand; state-owned cellular network developer PT Industri Telekomunikasi Indonesia (INTI); and PT Telekomunikasi Indonesia (Telkom), Indonesia’s largest telecommunication provider, for possible cooperation.

Foxconn, a subsidiary of Hon Hai Precision Industry Ltd., is the world’s largest electronics manufacturer. The company supplies about 40 percent of worldwide electronics output, according to The New York Times estimates.