Jakarta. Erajaya Swasembada, a listed handset device distributor, is set to launch operations on its assembly plant in East Jakarta by August as part of the company’s plan to start producing mobile phones in a bid to reduce costs from imports amid a projection of slowing sales.

“We will begin doing assembly, starting from our own brand, Venera. We’re currently also talking to other local brands for assembly,” said Hasan Aula, chief executive officer of Erajaya Group, to reporters in Jakarta on Thursday.

Still, he declined to provide more details, such as the name of the other brands and the plant’s investment cost.

The plant, which is expected to assemble 100,000 units per month, is operated by Erajaya’s newly acquired subsidiary, Axioo International Indonesia.

The handset distributor acquired a 51 percent stake in Axioo International Indonesia from Exa Nusa Persada for Rp 5.1 billion ($392,000) last month.

Exa Nusa Persada still holds the remaining 49 percent stake in Axioo International Indonesia.

Jeremy Sim, a director at Erajaya Swasembada, said that the company’s plan is in line with the government’s initiative for smartphone importers to boost their investment in the country.

“This supply chain is important. On top of complying with the government, this is an opportunity for the group to launch an end-to-end business strategy,” he added.

Erajaya Swasembada launched last year its first plant in Batam under one of its subsidiaries — Teletama Artha Mandiri — which assembles approximately 30,000 units of its Venera brand per month.

The handset distributor aims to boost net income by 4 percent to about Rp 363 billion this year — compared to 38 percent growth between 2013 and 2014 — while sales are targeted to grow by 6 percent to Rp 15.4 trillion, according to Jeremy.

“We’re more conservative this year. That’s why we’ve set the sales target at 6 percent. This is mainly due to the economy, currency and government regulations,” he said.

Indonesia’s economy grew by 4.7 percent in the January-March period, booking its slowest growth in five years.

At the same time, the local currency has been trading at its lowest level since 1998 for over two months. The rupiah weakened to 13,065 against the US dollar on Thursday from 13,040 the day before, declining by 5 percent since the beginning of the year, data from Bank Indonesia showed.

Erajaya Swasembada booked Rp 75 billion in net income in the first quarter, down 6.3 percent from the same period last year, amid rising costs. Sales climbed 30 percent to Rp 3.9 trillion.

GlobeAsia

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Source: The Jakarta Globe