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June 24, 2017

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Foxconn not serious about stake in Indonesia: Apindo

JAKARTA--The Indonesian Employers Association (Apindo) has warned the Indonesian government not to expect too much from the large investment promised by Taiwanese technology giant Foxconn, saying that the company has yet to show serious commitment.

"The company has been in discussions with our government for several years, but nothing has been firmly agreed to as yet. It seems that the firm is not serious about its plan to invest in the country," Apindo chairman Sofjan Wanandi said on Wednesday.

Foxconn only tried to get to know the Indonesian market, while continuing to pour its money into China, he told The Jakarta Post.

Sofjan said the firm had demanded many things, including that the government provide land in the capital city and another province in Java.

Foxconn, which is also known as Hon Hai Precision Industry Ltd., produces electronic components for various trademarks, including Apple, Acer, Cisco, Dell, Hewlett-Packard and Intel.

In February, Foxconn signed a letter of intent with the Jakarta administration, agreeing to invest about US$1 billion in the country over three to five years.

Industry Minister MS Hidayat previously highlighted that the investment realization from Foxconn would help the country reduce its imports of cell phones.

"Last year alone, we imported no fewer than 75 million cell phones and gadgets. That is not good for the development for our local industry and our foreign reserve," he said.

Jakarta Governor Joko "Jokowi" Widodo previously stated that he would help the company acquire 200 hectares of land in Marunda, North Jakarta, to support the establishment of the company's first factory in the country.

However, Sattar Saba, president director of PT Kawasan Berikat Nusantara (KBN), which operates a industrial bonded zone in North Jakarta, including Marunda, said that such land acquisition could only be carried out through a business agreement.

"So far, we haven't reached an agreement with Foxconn because it is requesting the land for free," he said Tuesday.

Sattar said KBN had offered land to Foxconn under the condition that the world's largest electronic device manufacturer would give KBN stakes in its planned project in the country.

"As a company, we need to make profits. We estimate that we can earn up to 1 trillion rupiah a year by holding stakes in the planned Foxconn's project. There is no way that we will give the land for free," he said.

Sofjan told the Post on Wednesday that Foxconn's request to acquire land for free was a ridiculous demand for an investment commitment and that the government did not need to meet the demand.

"Don't let ourselves be fooled by Foxconn, they are not the only one. There are other better electronic device manufacturers that want to invest here if they (Foxconn) don't want to," he said.

Foxconn's operations in China came under scrutiny after a number of worker-suicides in 2010 and subsequent revelations of poor working conditions at the company's manufacturing hub in Shenzhen.

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