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Indonesia’s Telecommunications Regulatory Body Wants RIM to Move Manufacturing from Malaysia to Indonesia

Aulia Masna - 25 June 2012

While we reported earlier today that Research In Motion is considering to split the company into two, each dealing with software and hardware separately, apparently the Indonesia Telecommunications Regulatory Body (BRTI) wants RIM to move its year old manufacturing facility in Malaysia to Indonesia.

BRTI committee member Dr. Riant Nugroho said to Detik that the government had been using the wrong approach to get RIM to comply with its regulations and that his agency will attempt alternative ways to get on RIM’s good side.

Dr. Nugroho said, “We want to use a different approach. Not by the intimidating language used by the government, not through political pressure, but through a business discussion.”

Asked about the BRTI statement, RIM Indonesia’s public relations manager Yolanda Nainggolan said, “Of course we welcome BRTI’s statement. We will await directions for further talks to comply with the regulations as well as to open discussions on opportunities that we can work on together.”

The issue with opening a data center here has been widely discussed. Not only will it require a massive investment on RIM’s part, which the company may not be able to afford given its dwindling fortunes, the Malaysian plant was just opened last year. Additionally there is little to no incentive for RIM to move its plant across the sea to neighboring Indonesia.

With massive layoffs on the horizon, primarily for cost cutting measures, there seems to be no reason for RIM to invest in another manufacturing facility in another country, especially not within the same region. Just because Indonesia is a far larger market than any other country in Southeast Asia, it doesn’t mean that manufacturing has to be done here.

Dr. Nugroho also said that it is not simply a business interest, but it’s also a strategic interest to assist the development of human resources in the technology field so the country can compete with the likes of India. It may be of such importance to the country but is it in RIM’s best interest? With sales of BlackBerry devices crumbling across the world, and it’s looking to save $1 billion, the last thing it needs is more manufacturing.

The government is still making a fuss regarding the lack of data center in the country which RIM doesn’t seem to have valid reason to comply with. Sure, it’s a regulatory requirement but it remains to be questioned why such requirement exists in the first place when the government still cannot guarantee the legal framework to secure such data center both in terms of physical and electronic protections. On top of that, the country’s infrastructure may not be adequate to sustain such a data center which would handle BlackBerry communications in Asia.

With RIM supposedly considering to spin off or sell its hardware business and focus on software and services instead, all this talk regarding moving the manufacturing plant may end up being a pointless discussion. It may shift to whomever end up being the new owner of RIM’s hardware business but who is to say the new company will still manufacture BlackBerry devices?

Whether RIM will confirm the rumor regarding the sale may be known in the coming weeks according to The Sunday Times.

[Update] A RIM spokesman has denied the rumors.

 

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