Hon Hai confirms plans for Indonesia plant after comment on delay

JAKARTA/TAIPEI Tue Dec 18, 2012 1:16am EST

JAKARTA/TAIPEI Dec 18 (Reuters) - Hon Hai Precision Industry Co Ltd, the main contract manufacturer for Apple Inc, has confirmed plans for a handset factory in Indonesia that local officials revealed over the summer but have since said were delayed.

Hon Hai said, however, that no time frame or spending target had been set for the project, which Indonesia's trade minister has said would cost $5 billion to $10 billion.

"We'll definitely proceed with the investment. We're not pulling out," said Hon Hai spokesman Simon Hsing. Hon Hai is a unit of Foxconn Technology Group, which also includes the world's largest contract manufacturer of mobile handsets.

"We're still evaluating certain things, including finding a local partner that can help with distribution and marketing."

Indonesia Industry Minister Mohamad S Hidayat had said on Monday that Foxconn had delayed its Indonesia project for several months. Trade Minister Gita Wirjawan had said in August the group was expected to start building a handset manufacturing plant in October of this year.

"This is because there are differences in tax calculation and it also has not agreed with local partners on several requirements and terms of condition," Hidayat told reporters.

Foxconn had never confirmed that it had specific plans for Indonesia, although Chairman Terry Gou had said it aimed to set up operations there.

Industry executives and analysts also pointed to the benefits of tapping one of Asia's cheapest labour forces and a duty-free zone of some 600 million consumers, while wages are rising and Foxconn's labour practices are coming under scrutiny in its main manufacturing base in China.

After worker deaths and suicides, Foxconn and Apple have pledged to improve conditions for its 1.2 million workers in China and raise wages by 16 percent to 25 percent.

In confirming plans for the plant on Tuesday, Hon Hai played down any suggestion of a delay.

"We and the government never talked about a timetable or investment size. We don't see any delay on our part," Hsing said.

"We are communicating aggressively with government officials there. Hopefully everything goes smoothly, and there will be major progress in a matter of weeks."