[JAKARTA] Taiwan's Foxconn Technology Group, the world's biggest electronic components maker, has cancelled plans to invest in a factory in Indonesia, Kontan daily reported on Tuesday, citing the head of an Indonesian business chamber.
Foxconn, whose flagship listed unit is Hon Hai Precision Industry Co Ltd, said last year it may invest US$1 billion in Southeast Asia's biggest economy.
But the Apple Inc supplier had decided not to go ahead because of land issues, Indonesian Chamber of Commerce and Industry Chairman Suryo Bambang Sulisto was quoted as telling the business daily, casting doubt on the company's broader expansion plan in Indonesia.
Mr Sulisto did not respond to phone calls requesting comment. Foxconn declined to confirm or deny the report. "As we have stated on a number of occasions, Foxconn would consider investments in Indonesia or other markets only if they made commercial sense," the company said in a statement.
Foxconn, which assembles products for global phone makers, is one of the companies likely to be affected by a new law due to take effect in 2017 requiring firms that sell smartphones in Indonesia to produce some of their content locally.
Indonesian officials had initially said companies must source 40 per cent of their content locally, but on its website, the communications ministry said the figure was now 30 per cent. It was unclear why the percentage was changed.
Critics say the rule - part of a push by President Joko Widodo to transform Indonesia from an economy that consumes products into one that produces them - could increase costs and restrict access to technology.
Foxconn had previously planned to invest in hardware such as phones, tablets and televisions, as well as telecommunication services in Indonesia, its spokesman told Reuters last year.
The company had hoped to tap the domestic market of about 250 million people and use it as a base to export to the rest of Southeast Asia. But talks with authorities had stalled partly because the government was reluctant to accept Foxconn's request for free land, sources previously said.
Last month, Foxconn partnered with China's Xiaomi to assemble phones in India.