S

outh Korean electronics giant Samsung Electronics Corporation may start producing cell phones early next year in Indonesia, where the number of mobile subscriptions exceeds its total population.

Samsung, which may become the first South Korean firm to manufacture cell phones here, is set to spend US$20 million to develop the first of three planned phases of the facility, according to the Industry Ministry'€™s director general for high-technology priority industries, Budi Darmadi.

The facility would be located in Samsung'€™s existing factory complex in Cikarang, West Java, near the factory it currently used to manufacture set-top boxes, he said on Tuesday.

'€œThe building already exists and the basic equipment for assembly is already available, so only a few additional elements are required,'€ he said.

Samsung produces a wide range of consumer electronic items in its Cikarang factory complex '€” from DVD players to TVs '€” and exports more than US$1 billion worth of goods made on-site each year.

According to the ministry, Samsung sells around 10 million feature phones and smartphones per year to Indonesia, most of which are sourced from Vietnam. That is equal to $1 billion in value and represents one-seventh of Indonesia'€™s total gadget market.

Furthermore, Samsung led the global smartphone market last year with 31.3 percent, shipping 313.9 million phones worldwide, according to International Data Corporation (IDC) figures.

Budi said the planned phone factory may produce around 800,000 cell phones '€” from feature phones to smartphones '€” each month for the domestic market. '€œThat would help us to substitute our cell phone imports.'€

The first phase of Samsung'€™s cell phone production, he said, was expected to reduce the $1 billion annual imports of Samsung cell phones by one-third.

Both domestic and global cell phone manufacturers are racing to tap into Indonesia'€™s lucrative market, which recorded 330 million mobile subscriptions last year, the highest level in Southeast Asia.

Indonesia is predicted to have the third-highest number of new mobile subscriptions in the region in 2019 at 7 million, after India and China with 28 million and 19 million new mobile subscriptions, respectively, according to the Ericsson Mobility Report, which was released recently by technology solutions provider Ericsson.

Several domestic firms have already set up facilities to produce cell phones and tablets under brands like Axioo and Advan, which are gaining ground in the local market. Other global manufacturers, including Taiwan-based Foxconn and China-based Oppo, are also looking to set up factories here.

Samsung Electronics Indonesia vice president Lee Kang Hyun did not respond to The Jakarta Post'€™s inquiries about the plan. However, previously, he neither confirmed nor rejected information from Indonesian government officials regarding Samsung'€™s investment.

Samsung is reportedly mulling whether to invest $1 billion in a third cell phone factory in Vietnam. It currently runs two factories in the country, which is increasingly being eyed by worldwide investors as a possible electronics manufacturing hub.

That plan has sparked speculation that Samsung may drop its plan to invest in Indonesia due to certain issues, including uncompetitive tax rules.

'€”JP/Linda Yulisman