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"(Reuters) - Foxconn Technology Group's investment of up to $10 billion in Indonesia will allow the main supplier of Apple Inc to tap one of the cheapest labor forces in Asia and a duty-free zone of some 600 million consumers.

Such cost savings could be vital for the mass producer, which relies on economies of scale to survive. Foxconn has seen rising wages and labor unrest at its main factories in China and has declared a strategy to diversify its production into other Asian markets.

Illustrating the cost pressures, Foxconn subsidiary Hon Hai Precision Industry, which makes Apple products such as iPads and iPhones, posted a profit margin of just 0.9 percent for January-March compared with the American firm's 39 percent.

"Foxconn already has factories in China and Brazil, and not yet one in Southeast Asia. I think Indonesia is a right decision from a market perspective," said Ali Soebroto Oentayo, chairman of Indonesia's electronics association, forecasting 20 percent growth in the country's electronics sales this year."

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