Political and social tension in Indonesia has caused Seagate Technology Inc to pull out of its $1.3 billion integrated electronic component project in North Sumatra and relocate it to ex-US naval base Subic Bay in the Philippines, according to a report in Bisnis Indonesia. Seagate had planned to build its plant, which was approved by Indonesian authorities last year, at the Kawasan Industri park in Medan. It was one of six major overseas-financed projects given tax breaks. The Singapore Business Times quoted Harvey Goldstein, president of PT Harvest International, which helps foreign investors find Indonesian partners, as predicting that other companies are likely to follow Seagate’s example and go elsewhere. However Korean chaebol Samsung Electronics Co Ltd has decided to go ahead with construction of a CD-ROM plant at its existing home electronics manufacturing complex in Indonesia. Construction of the new plant, which will have an annual capacity of two million 32x CD-ROMs, will start next month. Samsung may have a more accurate take on the economic realities of the situation as despite the recent unrest which has seen dozens of people killed in Jakarta and elsewhere on Java this month, there has been little unrest elsewhere in the country — including the planned site of the Seagate venture. The macroeconomic picture is also improving with inflation and interest rates on their way down and exports picking up.
