Publicly listed electronic manufacturer PT Sat Nusapersada (PTSN) announced that it would sign a contract with Taiwan-based Apple manufacturer Pegatron Corporation to assemble its products in Indonesia. In the disclosure posted at Indonesia Stock Exchange (IDX) website in early December, Sat Nusa founder and president director Abidin Fan stated that the products would later be exported to United States. He did not reveal the contract value. The company’s advanced facility in Batam is already producing smartphones for Xiaomi, Huawei, Asus and Foxconn.
“The company sustainability will get better as the company will not only focus on [assembling] smartphone and domestic market, but also to other products and global market. There will be product and market diversification that results in overall resiliency,” Fan said in the statement.
The announcement sent PTSN stocks price increased 7.83 percent to Rp 620 per stock. IDX recorded that the trade volume reached 264 thousands stocks with a value of Rp 155.29 million. The company stocks had gained 231.55 percent since the beginning of the year and reached its highest level of Rp 650 per stock.
Previously Nikkei Asian Review reported that Pegatron had chosen Indonesia to produce non-iPhone products affected by U.S. import tax, including set-top boxes and other smart devices. The company will shift its production to a rented factory in Batam, Riau Islands, within six months and is expected to begin full production in the mid-2019.
Trade dispute between China and U.S. had prompted Chinese companies to move its production bases to other countries so they could escape from import tax imposed by U.S. President Donald Trump. China and U.S. had involved in a tit-for-tat of trade tariffs since the middle of the year. However, Trump and China President Xi Jinping agreed for a trade war truce on the side lines of recent G20 summit in Buenos Aires as negotiation would persist.
White House had stated that Trump would postpone his threat to raise tariffs on US$200 billion Chinese goods from 10% to 25% by January 1, 2019. The officials from both countries will continue their talks over disputes on technology transfer, intellectual property and agriculture for the next 90 days until March 1, 2019.
“Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent,” the statement read.
Pegatron asserted that the truce would not affect their decision to diversify its manufacturing from China. The company stated that the investment in Indonesia would be settled either by the end of December or in early January as they have to move, install and certify equipment before fully operating, according to Nikkei Asian Review, without mentioning the investment value.
“This cannot be delayed for long,” says a source with knowledge of the plan. “Investment in Batam is going faster than other places.”