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Jakarta Post

Govt confirms Samsung to open factory in Indonesia

  • Tama Salim

    The Jakarta Post

Jakarta   /   Sat, August 16, 2014   /  12:27 pm

Industry Minister MS Hidayat has confirmed that South Korean electronics giant Samsung will open a cellphone factory in Indonesia contradicting the company'€™s previous statement that it would open the factory in another country.

'€œSamsung is planning to come in this year. I'€™ve been asked not to reveal too many details, but they are definitely coming,'€ Hidayat said in Jakarta on Friday.

Speaking to reporters on the sidelines of President Susilo Bambang Yudhoyono'€™s annual State of the Nation address at the House of Representatives, Hidayat said the South Korean company could build its factory before Foxconn did.

Foxconn, the Taiwanese technology company which supplies Apple Inc'€™s iPhones and iPads, announced last year it planned to build production facilities in Indonesia with an investment of up to US$1 billion. But, no progress has been made until now.

The Industry Ministry is also currently in talks with Foxconn'€™s representatives to discuss resolving problems which could impede the Taiwanese company'€™s investment plan.

Despite the good news, Hidayat was unable to divulge the value of Samsung'€™s investment, as the South Koreans were still mulling over incentives with the directorate general for taxation.

It is thought that the investment will be on a par with Samsung'€™s projects in Vietnam.

Samsung currently has two major mobile-phone factories in Vietnam: one in Bac Ninh province worth $ 2.5 billion, and another in Thai Nguyen worth $ 1.2 billion.

On Wednesday morning, president-elect Joko '€œJokowi'€ Widodo met with South Korean Ambassador to Indonesia Cho Tai-young at City Hall, with the aim of boosting bilateral relations between the countries during his administration.

Jokowi said that he and Cho talked about business, including a discussion about Samsung'€™s investment plans in Indonesia.

'€œDuring the meeting, Mr. Ambassador talked about Samsung'€™s expansion plan in Indonesia. In December [Samsung] will start the construction of its cellular phone plant,'€ Jokowi said, declining to elaborate further.

Samsung Electronics Indonesia'€™s senior executive Lee Kang Hyun said the company could not unveil much information about the plan.

'€œ[The expansion plan] is currently being processed by the government. We can'€™t say the exact month,'€ Lee told The Jakarta Post'€™s in a telephone interview, without confirming nor rejecting Hidayat'€™s and Jokowi'€™s claims when asked.

Samsung'€™s plans to build a phone-manufacturing facility in Indonesia have previously been in doubt.

Samsung had said that it would build a mobile-phone factory in Indonesia, but later it said it had withdrawn the plan because the government refused to provide the fiscal incentives required by the company.

Coordinating Economic Minister Chairul Tanjung later said the government would provide incentives to the phone manufacturer.

However, Samsung went ahead with its investments in Vietnam, making that country its production hub in Southeast Asia.

One of the reasons Samsung chose Vietnam over Indonesia was because the Vietnamese government offered a 30-year tax holiday, longer than the 10 years provided by Indonesia.

Esther Samboh
contributed to this story

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