Taiwanese Apple supplier, Compal Electronics look Indonesia become its new investment destination - Photo: Special

JAKARTA (TheInsiderStories) – Taiwanese Apple supplier, Compal Electronics look Indonesia become its new investment destination. Currently, the manufacturer of sophisticated electronic products such as iPad, iPhone, and Apple Watch is looking for a new location the Southeast Asian (ASEAN) region for production.

“Compal are looking a new locations in ASEAN. They will enter and are interested in investing in Indonesia,” Minister of Industry Airlangga Hartarto told the media in Jakarta on Wednesday (07/17).

The China – United States trade wars, he added, have made Apple ask its large suppliers to move around 30 percent of its production capacity from China to the Southeast Asia region. That was a step Apple to restructure its supply network. The manufacturer claimed it was too risky to fully rely on their manufacturing processes in China.

In addition to Compal, a number of key companies that assemble iPhones, such as Foxconn, Pegatron Corp., Wistron Corp., Quanta Computer (MacBook maker), Inventec Corp (maker of AirPods), Luxshare-ICT, and Goertek, reportedly was in the evaluation process to make production outside China.

Some countries that have been considered for the transfer are Indonesia, Mexico, India, Vietnam, and Malaysia. The proof was last May, Apple suppliers Pegatron Corp, announced that they would invest up to US$ 1.04 billion to build a factory on Batam Island. A new factory to produce chips for Apple smartphones in this country.

The Taiwanese manufacturer made an appointment in a letter signed to the Indonesian government, which said that the chip would be produced in partnership with Indonesian electronics company PT Sat Nusapersada Tbk (IDX: PTSN), according to the deputy minister of industry Warsito Ignatius.

Therefore, said Hartarto, companies that want to invest in Indonesia require the government’s partisanship to investors. For this reason, the government is currently preparing regulations related to International Mobile Equipment Identity (IMEI). This rule is a form of government protection for industry.

Meanwhile, the protection of the telecommunications-based electronics industry is still minimal because the import duty is still 0 percent. The IMEI is driving the industry in this country to grow. Because compared to other sectors the electronic foreign exchange is negative and wants to turn the import industry into a domestic-based industry.

“Regarding the IMEI in collaboration with the Ministry of Communication and Information, our ministry is the center of this database, the telecommunication-based industry has a 0 percent import duty, there is no protection,” he concluded.

Since early 2019, Indonesian government aggressively approach some assembler such as United States’ Apple Inc., China’ Huawei Tecnologies Co. Ltd., and South Korea’ Samsung Electronic to create its hardware in the country.

Indonesia is known as the world’ second biggest tin producer. While tin is one of the most important components in assembling cellular phone.

Coordinating Minister for Maritime, Luhut Binsar Pandjaitan assured that Indonesia will prepare incentives if those companies will establish their factories here. But there is no further detail yet about the incentive that will be given.

“We have approached Apple. Huawei, Samsung, everything has used (tin) material hardware. We have approached them to establish (factory) here. Of course we will give incentive for them,” said Pandjaitan.

Moreover, it is also in accordance with Indonesia’s plan in developing lithium battery industry. Recently, Pandjaitan inaugurated nickel-based lithium battery main component factory in Morowali, Central Sulawesi.

There will the first lithium battery component factory in Indonesia. PT QMB New Energy Material, a join-venture of China, Japan, and Indonesian companies. The factory is developed above 120 hectares land.

The factory is estimated need costs around $800 million. Not only supporting cellphone hardware, Pandjaitan said, the factory can also accelerate electricity vehicles. It targets to support 2,200 electricity cars, 711,000 hybrid cars, and 2.1 million electricity motorbikes in 2025.

Indonesia Morowali Industrial Park has collected $5 billion investment last year. The area owns 2 million tons capacity nickel pig iron production and 3.5 million tons stainless steel. Export value of these production reached $3.5 billion in 2018.

By the new lithium battery factory, Indonesia is expected to slash more import for the sake of decreasing current account deficit. Pandjaitan considered the action important to make Indonesia more independent.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com