Japanese electronics manufacturer, the Toshiba Corporation, will invest between US$400 million and $500 million in Indonesia to enlarge its production facility and tap into surging domestic demand for electronics.
Indonesia has seen a significant rise in electronics sales per year, driven by its rapidly-expanding middle class.
"Toshiba wants to expand its business here with new investment," Investment Coordinating Board (BKPM) chief Mahendra Siregar said on Tuesday at the Office of the Coordinating Economic Minister.
The plan was revealed after Mahendra, along with some ministers, such as Coordinating Economic Minister Hatta Rajasa, Industry Minister MS Hidayat and Trade Minister Gita Wirjawan, paid a official visit headed by President Susilo Bambang Yudhoyono to Japan.
Huge potential in the domestic market has attracted global electronics makers like the Panasonic Corporation, Japan’s largest home appliance manufacturer, to strengthen its foothold in the domestic market, which is projected to grow by 15 percent to Rp 33 trillion ($2.72 billion) this year from last year.
At present, Toshiba produces a slew of products in its Indonesian plants, including LED TVs, DVD players, air conditioners and notebooks.
Hidayat said Toshiba would, next year, construct a manufacturing facility that would be located on Java. The plant was designed to produce household appliances and other electronics items.
"The firm expects to focus more here, making Indonesia its production base outside Japan," he explained.
The government suggested Toshiba set up a joint venture with a local partner to execute its new business plan, and source a considerable number of components locally, Hidayat added.
Toshiba’s move emerged after it said that by the end of last month it would stop the production of LCD televisions at its plant in Dalian, northeast Liaoning province, China, and shut it down late this month, cutting 900 jobs following years of losses.
The Dalian TV plant made between 700,000 and 800,000 units in the past year, the majority of which were delivered to Japan. Following the closure, Toshiba will shift production to a Taiwanese contract manufacturer and continue supply to the Chinese market via a Chinese manufacturer.
The decision to close down its China plant was taken to "reform and return to profit its visual products business", according to a press statement.
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