Foxconn said last year it may invest $1 billion in Southeast Asia’s biggest economy.
However it looks like the scheme had to be abandoned over land rights. The Indonesian Chamber of Commerce and Industry Chairman Suryo Bambang Sulisto said that the company’s broader expansion plan in Indonesia looked unlikely.
Foxconn, which assembles products for global phone makers, and more, is one of the companies likely to be affected by a new law due to take effect in 2017 requiring firms that sell smartphones and tablets in Indonesia to produce 40 percent of its content locally.
The rule is part of a push by President Joko Widodo to transform Indonesia from an economy that consumes products into one that produces them. However it 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.
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 because the government was reluctant to accept Foxconn’s request for free land.
Last month, Foxconn partnered with China’s Xiaomi to assemble phones in India.