Jakarta. Taiwan's Foxconn Technology Group, the world's largest electronic components maker, will build electric cars components, electric batteries, electric motors and relocate its telecommunications spare part manufacturing facilities from China to the Batang integrated industrial area in Central Java in a move estimated to bring $8 billion direct investment to Indonesia, a minister said on Monday.
"We had signed the [memorandum of understanding] early this month. They will come to Batang," the Investment Minister and Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia told the House of Representatives Commission VI, which oversees investment rade, investment, state-owned enterprises, small- and medium-sized businesses, and national standardization, on Monday.
On Jan 21, Foxconn's listed flagship company Hon Hai Precision Industry, Indonesia's state-owned battery maker Indonesia Battery Corporation (IBC), Indonesia's listed miner Indika Energy, and Taiwan's electric bike maker Gogoro Taiwan signed the MoU to develop electric vehicles ecosystem that focuses on electric battery, electric mobility, and associated industries in Indonesia, the Taiwanese company said in a statement.
The signing ceremony was attended by Bahlil, Minister of State-Owned Enterprises Erick Thohir; Young Liu, chairman of Hon Hai Technology Group (Foxconn); Horace Luke, CEO of Gogoro Taiwan; Toto Nugroho, president director of IBC; and Azis Armand, vice president of Indika.
The companies did not disclose the investment value at the time. According to a document Bahlil presented to the House, the project would cost around Rp 114 trillion ($8 billion), the document showed. It did not detail how Foxconn and its partners share the investment cost among them.
Foxconn's investment would put a milestone to Indonesia's ambition to develop a global-scale electric vehicles industry and attract more investment to its shores. The BKPM targeted to attract domestic and foreign investment totaling Rp 1,200 trillion this year, up 33 percent from Rp 901 trillion last year.
For Foxconn, the initiative would present an ample opportunity to develop a sustainable new energy ecosystem in Indonesia with local partners.
“Hon Hai is excited to embark on the journey to transform the new energy ecosystem in Indonesia in cooperation with the local government, Gogoro, IBC, and Indika, Young Liu, the chairman of Hon Hai Technology Group, said in the statement.
"I believe the implementation of the MIH platform, alongside our build-operate-localize (BOL) strategy and manufacturing expertise, will allow us to meet the market demand and create a sustainable new EV [electric vehicles] ecosystem in Indonesia,” Liu said. He referred to "Mobility in Harmony," an open EV ecosystem platform promoted by mainly Asian companies.
Foxconn would also relocate some of its telecommunications spare parts factories to Indonesia from China, Bahlil said. Foxconn, the main component maker and assembler for Apple's smartphone, had been looking into investing in smartphone assembly businesses in Indonesia for almost a decade to no avail until now.
"This is a direct order from President [Joko "Jokowi" Widodo]. He wondered why [Foxconn's relocation] hadn't progressed," Bahlil said.
He added that the negotiation with Foxconn for the relocation was difficult and may draw a protest from China.
"We came to know that a country might protest my presence there, but I said as long as there is no law that prohibits us from trading, why should we be afraid of certain countries," he said.