Samsung plans to spend an initial $20 million to set up its planned mobile phone manufacturing plant in Indonesia.
A high-ranking official from Indonesia's Industry Ministry toldThe Jakarta Post that Samsung is planning to upgrade its existing set top box factory complex in West Java to give it the capability to manufacture mobile phones.
The upgrade will be conducted in three phases, with the $20 million marking only the investment for the first phase. The official expects Samsung to be ready to start producing handsets at the facility by early next year.
The factory could produce as many as 800,000 handsets bound for the domestic market per month, cutting Samsung's imports of handsets into Indonesia by up to a third.
Samsung was first revealed to be negotiating the establishment of a handset manufacturing facility in West Java last month.
Besides the strong domestic demand, Samsung has another motivation for setting up shop in Indonesia. The government has floated the prospect of imposing a 20% value-added tax on high-end smartphone imports - and possibly all mobile phone imports - and producing handsets locally could help it avoid these taxes.