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Chinese smartphone maker to build plant in Indonesia this year

Publication Date : 10-07-2014


China’s leading smartphone maker, Oppo Mobile Telecommunications Corp., plans to build a factory in Indonesia this year, a senior minister has said.

Industry Minister MS Hidayat said the factory, the construction of which may begin “in the near future”, would be located in West Java.

“They consulted us about their plans and also applied for a business permit with the Investment Coordinating Board [BKPM],” Hidayat said.

He declined to elaborate on the value of the planned investment, but said that Oppo aimed to tap into the enormous opportunities provided by the country’s domestic market of more than 240 million people.

The firm expected the Indonesian plant to also serve demand across Southeast Asia, Hidayat added.

The 10 members of the Asean are preparing for the establishment of a single market as well as a single production base by next year, under the so-called Asean Economic Community (AEC).

Oppo is flexing its muscles in the region, including its entry into the Philippines market with the launch in April of one of its flagship phones, the OPPO Find 7.

President director of Oppo’s Indonesian division, Jet Lee, said as quoted by Koran Tempo that Oppo would realise its investment plan after the presidential election, as it was waiting to see if there would be any policy changes that may potentially affect its business.

Oppo planned to produce between 5 million and 10 million cell phones each year to serve the Indonesian market, according to Lee.

Oppo entered the Indonesian market in April last year. Despite being a newcomer, it has seen its monthly sales hit 200,000 in Indonesia, the company’s second-largest market after China.

Indonesia heavily relies on imports to meet its surging demand for cell phones. The country imported more than 62 million cell phones last year and in the first half of this year, inbound shipments are estimated to have surpassed 27 million phones.

The government raised taxes earlier this year on consumer goods, including cell phones, to 7.5 per cent, compared with 2.5 per cent previously, amid concerns over the widening trade deficit.

The government had also mulled charging a 20 per cent luxury goods tax on cell phones to spur the fledgling domestic cell phone industry, but it recently delayed the plan due to fears that it could stimulate growth in illegal imports.

The local cell phone industry is rising with some new investments. Local manufacturer PT Hartono Istana Teknologi, which produces consumer electronics under the Polytron brand, has expanded its facility in Kudus, Central Java, to meet robust demand. It aims to produce 100,000 feature phones and 100,000 smartphones each month in the long run.

Other makers are also setting up new facilities, such as PT Teradata Indonusa — which assembles tablets and smartphones under the Axioo brand — and PT Arga Mas Lestari, which assembles tablets under the Advan brand.

Another producer, PT Sat Nusapersada launched production last week at its factory in Batam, Riau Islands, which will produce 4G smartphones.

The local component industry is also gearing up, with 15 component plants being built last year that are slated to produce a wide range of parts, from liquid-crystal displays (LCDs) to cameras.

The expansion of the domestic cellular phone industry would significantly lower imports by around US$2 billion annuall


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