JAKARTA (TheInsiderStories) — As a consequence of the United States (US) and China trade tariff wars, huge investment is on its way to enter Batam, Riau. The Investment Coordinating Board along with Batam Free Zone Authority (BIFZA), and Batam regional government are now following up with around US$1 billion worth of investment.
“This is an example of the extraordinary potential of trade wars taking place between the US and China,” said Capital Investment Coordinating Board Chairman Thomas Lembong on Thursday (12/13).
He declined to comment further about the investment value. but according to him, there are several investment scenarios that could play out.
As reported, Taiwanese iPhone and other smartphones assembling company, Pegatron Corp., planned to open a factory focusing on set-top boxes and other smart devices, along with local electronic device assembler PT Sat Nusapersada Tbk (IDX: PTSN) in Batam, next year.
Pegatron’s investment for the factory is expected to start this month. So it can start operating in mid 2019. According to plan, the assembler will rent a factory and employ around 8,000 to 10,000 workers.
Pegatron highlighted the relocation of it’s factory is being undertaken while pressured by trade tension, labour wage increases, and a labour shortage. Besides Pegatron, other Chinese companies such as Wistron, Quanta Computer, and Compal that assemble Apple products, also plan to leave China, following the trade tension.
Lembong realised that Indonesia must be more competitive than the neighboring countries. Previously, Pegatron had considered Vietnam as its assembling plant location, due to the electronic supply chain development made by Samsung Electronic smartphone assembler there. But investment in Batam, Indonesia, can be quicker than Vietnam.
“If Indonesia gives great incentive, the investment value will also be great,” he said.
Indonesia keeps trying to gain benefit from the current US-China trade war. In the US, government along with the American Chamber of Commerce, negotiated with the States fashion industry association to shift raw material procurement from China to Indonesia.
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