US-China trade war: iPhone factory to be built on Batam
by Mathias Hariyadi

For Taiwan-based Pegatron, the move will avoid production collapse and financial losses. The Indonesian island is a free trade zone and its proximity to Singapore is an important strategic factor as the city-state is only a few minutes by ferry. The deal should be ready by mid-2019.

Jakarta (AsiaNews) – Pegatron Corp, a Taiwanese electronics manufacturer, plans to set up a major plant on Batam Island, Riau archipelago. The company makes iPhones for US-based Apple.

According to Indonesian Industry Minister Airlangga Hartarto, Pegatron will invest a billion US dollars to build the new plant.

The move is widely seen as an attempt to avoid a collapse in production and the resulting financial losses, due to the trade war between the US and China.

“The first step of foreign investment programme is to provide funds,” said Minister Hartarto. “We are looking forward to learn about the plan with the Indonesian Investment Coordinating Agency (BKPM).”

Pegatron will shift iPhones production to the Batam plant after Beijing imposed tariffs on US products.

Originally, the factory was supposed to be built in Vietnam, but Indonesia proved to be the best option, partly because Batam is strategically located near Singapore, only 20-30 minutes away by ferry.

In addition, the island is one of four free trade zones established by Indonesia, along with the islands of Bintan, Sabang and Karimun.