Hon Hai to go slow with Indonesia investment

Taiwan manufacturer intends to enter the market by partnering local companies in the retail business first, before considering moving forward with its factory plans.

Hon Hai Precision Industry is being noncommital about plans to invest and set up a factory in Indonesia, choosing instead to enter the market via the retail route with local partnerships.

Citing an unnamed source, Focus Taiwan reported Thursday the Taiwan-based electronics manufacturer was considering going into Indonesia by setting up a retail business in cooperation with local partners. He added cell phones and tablet devices are likely to be the first products to be sold by Hon Hai given the strong local demand in Indonesia.

Another unnamed source also said any retail or manufacturing investment plans will have to depend on the conditions offered by the government. One precondition is a memorandum of understanding with the local government needs to be signed, detailing preferred conditions the manufacturer has set out, he added.

Hon Hai did not comment on its plans though, said Focus Taiwan.

The country's unclear regulations on imported handsets was earlier cited as the reason why Hon Hai has not gone ahead with its plans to set up a factory in west Java. An unnamed Hon Hai executive said in January that Indonesian authorities were not active in clamping down sales of knockoff phones or illegally imported handsets.

The Indonesian government has a different take on the situation though. Last December, Industry Minister M.S. Hidayat said the manufacturer has several terms and conditions yet to meet with a number of candidates for its local partners in order to build its manufacturing base in the country. He added the delay could be anything from a couple of months to six months.