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Foxconn plans massive plant in Indonesia

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Controversial hardware maker Foxconn looks set to expand its manufacturing empire outside of China by getting down to work on a 1,000 hectare site in Indonesia, which the government there hopes will be the first of a $10bn investment in the country.

There had been suggestions for weeks that the ODM was planning to set up a plant somewhere on the archipelago, but an official statement from the firm sent to Games Industry International now suggests a deal is imminent.

We are looking forward to establish a new manufacturing plant in Indonesia, although nothing is finalised yet. This will help us in manufacturing good quality products and make them available in the markets at lower prices.

With this, Indonesians will also get better employment opportunities. We will continue our efforts in establishing more manufacturing plants across the globe.

Indonesian industry minister M.S. Hidayat has been quoted as saying the total investment from Foxconn could reach anywhere from $8-10 billion over the next five years, although talking up such deals is part of the job for someone in his role.

If it all goes to plan, this will be Foxconn’s first major plant in Indonesia.

It currently has 13 factories in China employing over one million workers, and is developing some plants in Malaysia. Outside of Asia its biggest manufacturing presence is in Brazil.

As to why Foxconn is investing outside of China, a lower wage bill will certainly be one attraction of Indonesia. It says the average monthly wage there is around $100, significantly less than the 1,800 yuan ($281) paid to the basic level employee in the People’s Republic.

However, it’s not all about the money, according to Geoff Crothall, a spokesman for not-for-profit rights group China Labour Bulletin.

“Given that wages are still such a small part of the overall manufacturing cost, I don't think wage increases in China will be a major driving force for such a decision,” he told The Reg.

“A lot of major manufacturers adopt a China plus one strategy. It is not unusual for the main production base to be in China with other facilities in south-east Asia."

Foxconn is yet to reply to El Reg's request for further comment. ®

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