Indonesia has rejected a $100 million investment proposal from Apple Inc., stating that the offer falls short of its local content requirements.
The Southeast Asian nation aims to boost domestic manufacturing by requiring smartphones sold within its borders to consist of at least 40% locally produced components.
The ban, enforced since November 2023, has halted sales of Apple’s latest iPhone 16 model, along with Alphabet’s Google Pixel phones, for failing to comply with these rules.
The country’s Industry Minister, Agus Gumiwang Kartasasmita, confirmed the rejection of Apple’s proposal, noting its inadequacy when compared to investments the tech giant has made in neighbouring countries like Vietnam and Thailand.
Kartasasmita noted that Apple’s $100 million offer to establish a plant for accessories and components in Indonesia pales in comparison to its significant investments elsewhere.
For instance, Apple has funnelled billions into Vietnam, which has become an important manufacturing hub for the company. The minister also pointed out that Apple still has an outstanding $10 million investment commitment from 2023 that remains unfulfilled.
He pointed to the need for “fairness” in negotiations, stating, “We want Apple to continue doing business in Indonesia, but the terms must be equitable and aligned with our goals of local industrial growth.”
Jakarta expects Apple to clear its previous commitments and also make new investments stretching into 2026.
While Apple has no manufacturing facilities in Indonesia, the company has operated application developer academies in the country since 2018.
These initiatives were previously accepted as a partial fulfilment of local content requirements for older iPhone models. However, authorities are now demanding more concrete contributions, particularly in hardware production and local sourcing.
Indonesia’s approach to enforcing localisation requirements is in line with Countries like Vietnam that have successfully attracted industry giants through generous investment incentives and solid supply chain networks.
Other smartphone brands, including Samsung and Xiaomi, have complied with Indonesia’s rules by establishing important manufacturing operations within the country.
Meanwhile, Google Pixel phones remain banned under similar regulations, as the government continues its relentless focus on its localisation policies.
Kartasasmita disclosed that the government plans to invite Apple for further discussions. He stressed that Indonesia remains a lucrative market for the tech giant, with a population of over 270 million and a growing demand for smartphones.
Despite Apple’s lower market share in the country, the potential for expansion is considerable, making the resolution of this standoff necessary for the company.
The minister said the government is ensuring fair investment terms while facilitating local industrial development.
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