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Indonesia considers smartphone tax to spur local mobe-makers

Foxconn's $1bn factory investment looking like a very smart move

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In a move which won’t go down well with foreign smartphone-makers the Indonesian government is planning to levy a 20 per cent tax on all imported mobile phones, in a bid to support domestically made handsets.

The luxury goods sales tax (PPnBM) was originally to be levied only on smartmobes costing above Rp 5 million (£260).

However, the trade ministry appears to have had a change of heart, although minister MS Hidayat claimed the government is “still brainstorming on the floor price of cell phones”, according to the Jakarta Post.

If the rumours are true it will be a blow to those foreign smartphone makers increasingly eyeing up Indonesia as a potential growth market.

The world’s fourth most populous nation recorded the greatest smartphone sales volume and value of seven south-east Asian countries in 2013, according to market watcher GfK.

The firm claimed that Indonesian consumers bought 14.8m handsets last year worth $3.3bn, more than double the number bought in the next largest market of Thailand (7.2m).

Although the country has traditionally been a BlackBerry stronghold, Android tightened its grip on the market in 2013, with sales of smartphones powered by the Google OS jumping 23 per cent to account for 60 per cent of all smartmobes sold there, according to the analyst.

The government appears to be using some classic protectionism to spur its domestic handset industry.

El Reg wonders if Foxconn was given the inside track on its plans, seeing as the Taiwanese manufacturer recently decided to plough $1bn into a new plant in Indonesia producing what many believe will be smartphones for the domestic market. ®

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