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ocal phone retailers are spreading their wings into the smartphone manufacturing business to take advantage of a new rule on local content requirements for 4G smartphones.

Under the regulation signed recently by the communications and information minister, the trade minister and the industry minister, all 4G smartphone brands sold nationwide should have at least 30 percent local content starting from early 2017.

Publicly listed cell phone distributors PT Erajaya Swasembada and PT Tiphone Mobile Indonesia are among the first to be readying themselves to tap into the booming 4G smartphone market in the future, teaming up with existing smart device manufacturers.

Erajaya has jointly been building a smartphone assembly plant in Pulogadung, East Jakarta, with local firm PT Exa Nusa Persada, a subsidiary of Singapore-based computer and electronics manufacturer Axioo International. Meanwhile, Tiphone has inked an agreement with Taiwanese firm Arima Communications Corp., a manufacturer of multi-band GSM/GPRS, 3G mobile phones and smartphones.

Erajaya, which has also taken over a 51 percent stake in Exa worth Rp 5.1 billion (US$383,000), is set to operate the new plant sometime this month. Once it starts operation, it will be able to make 100,000 units monthly.

Erajaya corporate secretary Djatmiko Wardoyo said that the new plant could potentially be used to assemble a number of global brand smartphones in compliance with the government'€™s '€œmade-in-Indonesia'€ 4G smartphone rule.

'€œWe'€™ve partnered with various brands. In addition, the government has the local content regulation, while not all brands can possibly open factories in the country. So, we can offer to manufacture their products in the plant,'€ he said.

Erajaya currently imports and distributes smartphones and smart devices under 13 brands, including Apple, Samsung, BlackBerry and Xiaomi.

Tiphone, which last week signed a memorandum of understanding (MoU) on the factory construction with Arima, said that the new facility would be located beside the one it was currently constructing in Pluit, North Jakarta.

'€œThat is a new one,'€ said Tiphone corporate secretary Semuel Kurniawan when asked by The Jakarta Post whether the plant built together with Arima was the same as the one currently being constructed in Pluit. However, Semuel declined to elaborate on the details of the new plant.

According to its business plan, Tiphone will develop four smartphone assembly lines in Pluit, with each line producing 3,000 cell phones per day. The firm has allocated around Rp 20 billion of initial investment to develop the first line.

As half of its population joins the ranks of the middle class, Indonesia has become one of the world'€™s biggest and most promising cell phone markets. Global cell phone makers such as South Korean electronics giant Samsung have begun ventures to tap into the robust opportunities in the market of more than 250 million in addition to meeting the local content requirement.

Chinese phone maker Xiaomi, which has gained popularity through its e-commerce sales, earlier said it was in talks with partners to assess the possibility of setting up local assembly lines.

The domestic supporting industry is capable of producing various cell phone components such as LCDs, batteries, keypads, casing, chargers and cameras. Existing local electronics component manufacturers include Batam-based PT Sat Nusapersada and Serang-based PT Tridharma Kencana.