T

aiwan has expressed interest in relocating some of its industrial base to Indonesia to focus more on capital and technology-intensive industries, according to a senior Industry Ministry official.

'€œDelegates from Taiwan have conveyed that they are interested in relocating some of their industrial [base] to Indonesia, particularly those related to spare parts, machinery and steel,'€ said I Gusti Putu Suryawirawan, the Industry Ministry'€™s director general of metal, machinery, transportation equipment and electronic industries.

Putu said after a closed-door meeting with delegates from the Taiwanese Ministry of Economic Affairs on Monday that no commitment between his ministry and the Taiwanese delegates had yet been made, but a number of Taiwanese companies had reportedly launched joint ventures with local Indonesian companies to tap into Indonesia'€™s growing steel and smartphone markets.

'€œThe inflow of foreign direct investment [FDI] is of great importance amid our unstable local currency exchange rate,'€ said Putu.

FDI is expected to help the country prop up the exchange rate of the rupiah, a currency that has declined to its lowest level since the 1998 Asian financial crisis.

Taiwanese investment in Indonesia amounted US$85.09 million during the Jan.-June period of this year, surpassing investment from Canada and Australia worth $73.34 million and $71.7 million, respectively, according to data from the Coordinating Investment Agency (BKPM).

Contacted separately, YC Tsai, the director of the economic division at the Taipei Economic and Trade Office, said that the Taiwanese investment trend in Indonesia had shifted from labor-intensive industries to capital and technology-intensive industries.

He said that Taiwan saw Indonesia both as huge market and as a potential production base, given its large population as well as abundant workforce, natural resources and growing industry.

Citing data from the Taiwanese Chamber of Commerce, Tsai said that there were currently 2,000 Taiwanese companies operating in Indonesia, providing jobs to over a million employees.

Putu informed those concerned that among Taiwanese firms currently considering investment in the country were the China Steel Corporation (CSC) and Arima Communications Corp.

CSC is set to launch a joint venture with local steel firm PT Artha Metal Sinergi today, with the joint venture aimed at producing integrated steel products.

CSC, which was founded in December 1971, is based at Kaohsiung in Taiwan, according to information from its website.

According to Putu, the investment value of establishing the joint venture had yet to be disclosed, but he said that a giant steel factory would usually require no less than Rp 3 trillion ($214.2 million) in investment, a figure that exceeds the minimum requirement needed to obtain a tax holiday.

The existence of the joint venture will likely also help Indonesia satiate its national demand for steel that presently outweighs supply.

Data from the Southeast Asia Iron and Steel Institute (SEAISI) and state-run steel maker Krakatau Steel revealed that domestic steel production stood at only around 4 million tons last year, far below the country'€™s total demand for steel that reached 13 million tons.

In another development, Taiwanese technology giant Arima has also signed an agreement with Indonesian phone and voucher distributor PT Tiphone Mobile Indonesia to build an assembly plant.

Arima is well-known as a manufacturer of multi-band GSM/GPRS, 3G mobile phones and smartphones in Taiwan.