Foxconn's Failure to Stop in Indonesia According to National Investment Policy Eyes

After it was reported that there were issues related to negotiations with the government, Foxconn is now reportedly choosing to resign and switch to establishing a factory in Malaysia. This was as stated by the General Chairperson of the Indonesian Chamber of Commerce and Industry (KADIN) Suryo Bambang Sulisto who said: regret the decision this. Indeed, Foxconn's withdrawal from investing in Indonesia is considered difficult, because they have brought in a large amount of investment.

Foxconn's plan to build a factory in Indonesia has actually been echoed since 2012. Previously, it was reported that the total investment value for the construction of the factory to be disbursed was around $1 billion. Initially, it was targeted that the factory would start construction in October 2014. Finally, there were rumors about the failure of Foxconn to stop in Indonesia due to the issue of the factory land being too expensive by related parties. It is planned that the Foxconn factory will be established in the Beri Nusantara (KBN) area.

The government gave the land too high a price, while Foxconn reportedly asked for the land for free. According to Suryo, the government has nothing to lose if it provides incentives for granting land, especially by looking at the potential of companies that will be given to accelerate the national economy. Suryo said that this huge investment from Foxconn will help the government fill the job vacancies and anticipate import substitution strategies by assembling electronic products domestically.

From Foxconn's side until now Hasn't made a decision yet officially related to the failure of the establishment of a factory in Indonesia. When asked to comment, his party only emphasized that currently Foxconn is still considering investing in the establishment of factories in Indonesia. However, his party also said that it was possible that the investment would be diverted to other countries, if viewed from a commercial point of view, there was no potential.

Between opportunity and business bargain

From the public's point of view, this is a difficult decision. Foxconn asked for free land and opportunities to strengthen domestic industry lines. Diplomatically, Foxconn's mission to invest heavily in Indonesia is planned to meet the increasing demand for electronic products in the Southeast Asia region. Which means that Indonesia will actually be used as a production center for Foxconn products before being rushed to the market. The Jokowi administration also continues to call for domestic productivity. Several policies related to digital products have also been put in order. But this time the "ball" is in the Ministry of Industry to consolidate.

On the other hand, similar industry players are also preparing to be present in Indonesia. Last reported Arima currently discussing with Asus and HTC to realize the establishment of a national factory to meet the government's demands regarding TKDN. For Indonesia, this trend should also be considered as an investment. It is a good strategy to encourage the community to be involved in the production process, even if it starts from the assembly process.

If you look at the issues faced by Foxconn in plain view, the phrase "there is a lot of land in Indonesia, what's wrong with giving a little for product development", the government might have other judgments, including whether it will pose a threat to the local manufacturing industry. We can only guess because the Ministry of Industry is still silent about this.

With economic conditions like this, the presence of foreign investors into the country is urgently needed to increase foreign exchange. Importing raw goods for assembly and redistributing to neighboring countries in Southeast Asia should be a added value to increase Indonesia's exports which according to BPS statistics even down throughout 2015.

Foxconn's decision to delay construction of its plant so far is likely to give image negative impact on the current investment climate in Indonesia.