Apple has submitted a US$10 million investment plan to the Indonesian government in hopes of lifting the ban on the iPhone 16 to enable its immediate sale in the local market.
The latest iPhone model, which was launched in late September, has yet to be sold in Indonesia due to non-compliance with the country's Tingkat Komponen Dalam Negeri (TKDN), or the portion of cost carried out in Indonesia. The regulations require that products use at least 40% local components or compensate through investments.
The Indonesian Ministry of Industry has reiterated that selling the iPhone 16 is illegal and criticized Apple for not fulfilling its promised investment. Additionally, the ministry has recently banned the sale of Google Pixel for similar reasons.
Under the proposal, Apple would invest US$10 million in manufacturing accessories and parts for Apple devices in Bandung in collaboration with suppliers. The Indonesian Ministry of Industry is evaluating the proposal and may make adjustments, with a decision expected soon, according to Bloomberg.
Based on Apple's supplier list for fiscal year 2023, only Yageo operates an Apple product manufacturing site in Indonesia, located in Mukakuning on Batam Island.
Analysts view Apple's US$10 million investment as modest, given Indonesia's large consumer base, particularly considering that a significant portion of the population under 44 years old are heavy digital technology users. IDC data shows that Apple and Samsung dominate Indonesia's smartphone market for devices priced above US$600.
Apple CEO Tim Cook visited Indonesia, Vietnam, and Singapore earlier in the first quarter of 2024, announcing the establishment of developer academies in Indonesia, which now total four locations. However, the Indonesian government has indicated that Apple initially committed to an investment of US$110 million, leaving a shortfall of US$15 million.
While Apple focuses on developing digital talent, competitors like Samsung, Xiaomi, Oppo, and Vivo manufacture their mobile phones in Indonesia. The Indonesian government maintains that restricting the iPhone 16 and Google Pixel is intended to ensure policy fairness.
Indonesia's newly elected President Prabowo Subianto, who took office in October, continues the previous administration's policies to protect domestic industries. However, some commentators warn that the government's hardline stance may provoke backlash from businesses. Although Apple's investment is seen as a victory, it could risk losing opportunities under the "China +1" strategy as Prabowo seeks to attract foreign investment.
