Foxconn wary of Indonesia's imported handset rules

Uncertainty over Indonesia's regulations on imported handsets reportedly prompted Taiwan-based Hon Hai Precision Industry, also known as Foxconn, to postpone its factory investment plans in the country last December.

Citing an unnamed Foxconn executive, Central News Agency (CNA) reported on Thursday that Foxconn remains doubtful about setting up a phone manufacturing plant in Indonesia. The executive explained Indonesia's regulations on imported handsets were unclear, and local authorities were not active in clamping down sales of knockoff phones or illegally imported handsets.

Foxconn also needed to find the right local business partners and better understand the needs of Indonesian consumers before making the final decision of its investment plan, the executive added.

The source's comments were in response to queries to confirm a recent article in The Jakarta Post, which quoted Indonesian Trade Minister Gita Wirjawan as saying Foxconn would start factory construction in 2013, the CNA report stated. The executive did not comment directly on the Jakarta Post article but said Foxconn was still evaluating its investment plan, it added.

Plans were underway since mid-2012 for the Taiwanese contract electronics manufacturing giant to set up a plant in west Java by October and become operational by December. But Foxconn said on Dec. 17 it will postpone its factory investment for another three to six months, because it had not yet met several terms and conditions laid out by the Indonesia government.

According to the CNA report, the Foxconn executive said Indonesia, with its population of 240 million, is an attractive market. He added that should Foxconn continue its investment plan in the country, it will use an "import substitution strategy" to help transform Indonesia's industrial structure. Such a strategy is one that focuses on replacing foreign imports with domestic production.