Three cellular phone manufacturers, possibly including world leader Nokia, are constructing plants in Indonesia to take advantage of the rapidly growing industry, an association and a ministry official say.
Many of the plants are scheduled to begin operating before the end of this year.
Each firm has set aside roughly US$100 million in investment, said Eko Nilam, head of the Indonesian Cellular Phone Importers Association, on Monday.
"The manufacturers are building their plants on a combined 6.5-hectare plot of land in an industrial zone in West Java, with a full capacity of around two million units per annum each."
He said two of the manufacturers were based in Asia and the third in Europe, but declined to give names.
The plan was confirmed by Telecommunications and Information Industry director Ramon Bangun of the Industry Ministry, who said he was convinced one of the firms was Nokia.
He also mentioned as having a role in the development a South Korean-based research and development firm that provides cellular phone technology and design solutions for a manufacturer in China.
"The company has been supplying mobile phone designs for a Chinese mobile phone manufacturer and is now eyeing its own production site in Indonesia," Ramon told The Jakarta Post.
"As a first step, the factory will start assembling by the end of this year and perhaps start producing components next year," he said.
Although Indonesia represents a massive market opportunity, especially as no foreign manufacturers operate plants in the country, Nilam said a lack of regulations on cell phone imports had allowed the market to become flooded with illegal products.
According to the Central Statistics Agency, the total value of cell phones imported into Indonesia increased from $89 million in 2004 to $120 million in 2005, $279 million in 2006 and to $460 million in 2007.
There are 80 million active mobile phone units in Indonesia, according to a recent survey conducted by the Indonesia Development Monitoring Research.
"Say one mobile handset unit is priced at $1; that means we imported 4.6 million units last year, 2.79 million units in 2006, 1.2 million units in 2005 and 890,000 units in 2004.
"Now, where did all those 80 million units come from?" Nilam said referring to the illegal products flooding the domestic market.
"The Trade Ministry must regulate the mobile phone market by giving import licenses only to companies appointed by authorized manufacturers to save the country's market and eventually lure investors."
Sales of cellular phones have boomed recently, spurred by a price war waged by the country's more-than 10 network operators.