JAKARTA: All cell phones imported for distribution in Indonesia will be obliged to use at least some locally made components in a bid to spur the development of the domestic industry.
Industry Ministry director for electronics and telematics industry Ignatius Warsito said on Wednesday that the government would go ahead with the plan, although many cell phone importers oppose it.
Cell phone importers must either set up their own manufacturing facilities or hand over assembly to local original equipment manufacturers (OEM), according to Trade Minister Regulation No. 38 issued in 2013.
Warsito said the government would be strict in implementing the rule and revoke the import license of any importer who failed to comply. “This measure aims to help boost the production capacity of our local cell phone industry Our target is for half of [annual] cell phone demand to be produced locally by 2017,” he told reporters at his office.
As an incentive to make domestic production financially competitive, the government will pay the import duties of cell phone components. Some cell phone makers have complained about uncompetitive import tax rules in Indonesia, with import duty for cell phones set at 0 percent, while duty for components is as much as 15 percent, discouraging investment.
Warsito said that parallel to the measure, the Communications and Information Ministry had demanded that smartphones equipped with 4G LTE technology use 40 percent local content by 2017, or they will not be distributed in Indonesia.
