South Korean-based Samsung Electronics Co., the world’s biggest technology firm by revenue, is looking into the possibility of establishing a mobile phone manufacturing plant in Indonesia, one of the world’s largest mobile phone markets.
Executives of PT Samsung Electronics Indonesia, the Korean giant’s local arm, expressed the firm’s interest in setting up a mobile phone factory during a meeting with Industry Minister MS Hidayat on Tuesday in Jakarta.
“Samsung has yet to reveal the value [of its total possible investment], but I told them about various tax incentives that we may provide for the investment,” he told reporters after the meeting at his office.
Samsung’s plan would help the firm cut down mobile phone imports from regional peers, such as Vietnam, and such an investment would be economically feasible due to Indonesia’s lucrative market, according to Hidayat.
The plan is important to Indonesia, which is among the most attractive emerging markets for overseas investors, as it attempts to cut imports after recording its first-ever trade deficit last year, totaling US$1.65 billion, as well as to attract a sizable amount of investment to develop more value-added goods.
Indonesia, Southeast Asia’s biggest economy, has seen demand for consumer goods — including mobile phones — rise markedly in recent years thanks to an emerging middle class that makes up more than half of the population.
It imported approximately 50 million mobile phones worth $4.5 billion last year. Samsung, which last year globally overtook Apple for smartphone sales and Nokia for mobile handsets, contributed around $1.2 billion to the total, according to the Industry Ministry’s statistics.
The producer of Galaxy smartphones and tablets claimed it supplied 80 percent of all Android smartphones used in the world’s fourth most-populous nation.
Indonesia is now among the world’s largest mobile phone markets. The figure of subscriber identification module (SIM) cards in the country is more than 120 percent of its overall population.
To curb illegal phones and stimulate investment in the domestic mobile phone industry, the government issued a new ruling, effective as of Jan. 1, that only allows registered importers, with licenses issued by the Trade Ministry, to import a wide range of mobile phones, including smartphones, hand-held devices and tablets.
Samsung’s plan followed on the heels of another move by Taiwan-based Foxconn Technology Group — the world’s largest electronics manufacturer that supplies components to major clients such as Apple Inc., Dell Inc., and Microsoft Corp. Earlier, Foxconn reported plans to spend up to $10 billion in investment over the span of five years to develop manufacturing plants in Indonesia.
Investment Coordinating Board (BKPM) chairman Chatib Basri said the government was currently in the final rounds of negotiations with Foxconn over a few issues, but declined to comment further.
“What is certain is that the progress is positive,” he told The Jakarta Post in a text message.
Samsung has operated in Indonesia for several years producing a wide range of electronic products and exporting components to at least 80 countries.