Report: Foxconn to partner Erajaya in Indonesia mobile push

Indonesian official says Taiwanese manufacturer will team up with local mobile phone distributor Erajaya Swasembada to offer locally-made handsets, and it will start constructing its factory later this year.

Foxconn will likely start construction of its factory in Indonesia in the second half of this year after reportedly inking a partnership deal with local mobile phone distributor and retailer PT Erajaya Swasembada to offer locally-made handsets and tablets.

Citing Indonesia's Industry Minister M.S. Hidayat, The Jakarta Post reported Wednesday the Taiwanese contract manufacturer had made the decision to go ahead with its investment plan in the country after it identified its local partner.

Last December, Hidayat said the manufacturer had to delay its plan in Indonesia for several months as it had yet to meet several terms and conditions regarding the choice of its local partner. Foxconn was to set up its first factory, located in Modern Cikande Industrial Estate in Banten province in West Java, and its total investment in the country was expected to go as high as US$10 billion.

Foxconn was also said to harbor uncertainties over local market conditions should it invest in Indonesia. An unnamed company executive said in January that uncertainty over Indonesia's regulation on imported handsets as well as not having the right local business partners to help it better understand the needs of local consumers were reasons for delaying the investment. 

With the partnership with Erajaya--which distributes brands such as BlackBerry, Nokia and Samsung and sells its Venera brand of handset--it seems Foxconn's concerns have eased. And this could be the stepping stone for Indonesia to start its component manufacturing industry, the official noted.

Hidayat said: "If the business operates well, we can gain stronger control over our domestic market and reduce imports, while also building a component industry."

However, Erajaya spokesperson Djatmiko Wardoyo played down the minister's statement regarding the partnership. He told The Jakarta Post that the company is in talks with Foxconn over a possible partnership, but they are still looking over the feasibility study for the investment plan.

Wardoyo added: "Basically we are enthusiastic about the encouragement from the Trade Ministry to localize production because we believe in a long-term business plan."