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Indonesia's biggest phone distributor plans to build own factory
Publication Date : 30-05-2014
Indonesia's largest phone distributor and retailer Erajaya Swasebada plans to build its own mobile phone factory to produce its handset brand Venera, which is currently manufactured overseas in China and Taiwan.
Erajaya president director Budiarto Halim said in Jakarta recently that the company was currently conducting a feasibility study, which was expected to be finished in the next two to three months.
The company refused to provide further details on the plan — such as when the construction will commence and its capacity — but Budiarto said the facility could cost the company 50 billion rupiah (US$4.3 million) and would be located in Cengkareng, West Jakarta.
The investment will be allocated from the company’s capital expenditure, which will amount to about 210 billion rupiah this year.
Erajaya director Sim Chee Ping said the company’s plan to operate its own factory would comply with a trade ministry regulation, which encouraged local distributors to set up their own factories in order to comply with industry and safety standards.
About a recent media report which said that Foxconn would pull its investment plan, Sam said that the company’s cooperation with the Taiwanese technology giant was still intact despite the company’s decision.
He said that the Jakarta-listed firm would focus its business partnership on the distribution of Foxconn’s cell phones instead of taking part in manufacturing activities.
In May last year, Erajaya signed a letter of intent (LoI) with Foxconn to be the latter’s local partner to manufacture and sell cell phones and tablets nationwide as part of Foxconn’s plan to develop an Indonesian factory, but there is a rumor circulating that the Taiwanese firm had decided to cancel its investment plan.
“We might take part in the cooperation as distributor — which is our main specialty — instead of manufacturing the products. We have actually distributed Foxconn products, including the recently launched BlackBerry Z3,” he said.
The device — launched earlier this month — is the first product that Canada-based cell phone maker BlackBerry has jointly manufactured with Foxconn.
Foxconn, which is also known as Hon Hai Precision Industry Ltd., produces electronic components for various firms, including Apple, Acer, Cisco, Dell, Hewlett-Packard and Intel.
In February, Foxconn signed a LoI with the Jakarta administration, indicating its willingness to build its factory in the capital with investment expected to reach S$1 billion ($797 million) in three to five years.
Sam said that the capital expenditure would be partly used to establish new outlets and to open Erajaya’s headquarters in Jakarta.
As of December, the company has 94 distribution centers, 469 owned retailers, and 19,000 third-party outlets.
Eraja distributes 13 global brands, namely Acer, Apple, Asus, BlackBerry, Dell, HTC, Huawei, Lenovo, LG, Motorola, Nokia, Samsung and Sony.
Last year, the company’s net profit went down by 19.7 per cent year-on-year to Rp 348.61 billion, while its revenue slightly declined to 12.73 trillion rupiah from 12.88 trillion rupiah recorded in 2012.
Sam said that the drop in its net profit and revenue were due to floods in Jakarta that occurred along the first half of last year, hampering the company’s sales, and due to rupiah depreciation against the US dollar, which squeezed its profits.