The pressure to build iPads and iPhones at even cheaper cost is prompting Foxconn, the world’s largest contract manufacturer, to look beyond China – to Indonesia.
The Indonesia’s trade minister revealed this week that Foxconn will invest up to $10 billion in Indonesia. Under the deal, Foxconn will be able to use one of the cheapest labor forces in Asia – with wage levels described by some as 60 percent of China’s.
The EMS giant has already begun producing Apple’s iPhone in Brazil, as the Brazilian government last year gave significant tax breaks and other financial incentives for Foxconn to assemble Apple devices there.
The move to invest in Indonesia, however, marks Taiwan-based Foxconn’s first foray into Southeast Asia.
The shift in the manufacturing base to Indonesia from China and Vietnam has been already happening in other industries such as textiles.
Quoting Asian Development Bank data, Reuters reported that monthly wages in Indonesia average $113, less than half the level in Thailand and a third of China's.
Beyond cheap labor, another pull for the investment in Indonesia is what is expected to become a duty-free zone of some 600 million consumers. Goods with a substantial component made in Indonesia will qualify for free trade by 2015 within Southeast Asia.
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