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Foxconn to decide fate of Indonesia project in Oct-source

Source: Reuters - Fri, 25 Apr 2014 01:10 GMT
Author: Reuters
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(Adds quote from government official)

By Faith Hung

TAIPEI, April 24 (Reuters) - Foxconn Technology Group will decide in October whether to proceed with a planned $1 billion manufacturing project in Indonesia after a new government takes office, a company source said on Thursday.

Foxconn, a major supplier to Apple Inc, wants to expand beyond China, where its massive production base has come under fire from international labour groups after a series of suicides and accidents since 2010.

It said in February it would submit a concrete proposal to Indonesia's government about the project within three months, but the company source said discussions with the Indonesian authorities had run into difficulties after inconclusive parliamentary elections in April.

Indonesia is due to hold presidential elections in July and the new government will not take office until October. Indonesian government officials had previously said they were still discussing the terms of the project with Foxconn but declined to give any details.

"We are still pursuing the project aggressively and communication is ongoing," the source told Reuters. "But it will be until October that our decision can be made."

"As long as the next Indonesian government is ready, Foxconn will be ready," the source added. They declined to be identified due to the confidentiality of the matter.

Foxconn is the parent company for Hon Hai Precision Industry Co Ltd, the world's largest electronics contract manufacturer. The Indonesia project is seen as a key factor in making Foxconn's group sales grow to T$10 trillion ($333.3 billion) over the next decade from T$4 trillion this year, the source said.

The source said Foxconn had yet to receive guarantees from the Indonesian government on incentives such as tax breaks and discounted property.

The company was also confused because it has to deal with several ministries, the source said.

"There are four different ministries we have to deal with. Each of them is telling us different things," the source said. "We can't afford to move our fleet into Indonesia before it is clear who will be making policy in the country."

The source did not identify the ministries, but the Industry Ministry has been involved in discussions with Foxconn. A senior ministry official said the delay was Foxconn's decision, and had little to do with the government.

"From our point of view, Foxconn can decide its investment whenever it likes," Budi Darmadi, director general of high-tech industry at the Industry ministry, told Reuters.

"There is no need to wait until the new government takes over in October." (Additional reporting by Yayat Supriatna in Jakarta; Editing by Miral Fahmy)

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