Foxconn hasn't canceled investment plan in Indonesia: ministry official

JAKARTA (Reuters) - Taiwan’s Foxconn Technology Group, the world’s biggest electronic components maker, has not withdrawn its plans to invest in a factory in Indonesia, an Indonesian industry ministry official said on Tuesday.

The official’s comment came after Kontan business daily quoted Indonesian Chamber of Commerce and Industry Chairman Suryo Bambang Sulisto as saying the Apple Inc supplier had canceled its investment plans due to unspecified land issues.

I Gusti Putu Suryawirawan, director general of metals, machinery, transport equipment and electronic industries, denied the report but made no further comment on the situation when asked by reporters on Tuesday.

Sulisto did not respond to phone calls requesting comment.

Foxconn declined comment beyond saying: “As we have stated on a number of occasions, Foxconn would consider investments in Indonesia or other markets only if they made commercial sense”.

“We will continue to look at investment opportunities in Indonesia as we do in a number of other markets, and would provide updates only if the company has anything to announce regarding its investment plans.”

Foxconn, whose flagship listed unit is Hon Hai Precision Industry Co Ltd, said last year it may invest $1 billion in southeast Asia’s biggest economy.

The group, which assembles products for global phone makers, is likely to be affected by a law due to take effect in 2017 requiring companies which sell smartphones in Indonesia to produce some of their content locally.

Indonesian officials had initially said companies must source 40 percent of their content locally, but on its website the communications ministry said the figure was now 30 percent. It was unclear why the percentage had changed.

Critics say the rule, part of a push by President Joko Widodo to transform Indonesia from an economy that consumes products into one that produces them, could increase costs and restrict access to technology.

A Foxconn spokesman said last year the company planned to invest in making hardware such as phones, tablets and televisions in Indonesia, as well as in telecom services.

The company had hoped to tap the domestic market of about 250 million people and use it as a base to export to the rest of southeast Asia. But talks with authorities had stalled, partly because the government was reluctant to accept Foxconn’s request for free land, sources said.

Last month, Foxconn partnered with China’s Xiaomi [XTC.UL] to assemble phones in India.

Additional reporting by Michael Gold in Taipei; Editing by Miral Fahmy and David Holmes