Indonesia blocks Apple Inc. to sell its newest iPhone in Southeast Asia’s largest economy, on the grounds that the company has not met local investment requirements.
The iPhone 16, which was launched in September, cannot be marketed domestically because the local unit of PT Apple Indonesia has not met the 40% domestic content requirement for smartphones and tablets, the Ministry of Industry said in a statement on October 25. can still be sold in Indonesia.
This is a challenge for Apple, which has enjoyed healthy initial sales of its flagship products in other Asian markets such as China. Even though Apple is outside the top six smartphone brands in Indonesia, it is a market that has the potential to grow with a young population that is increasingly technology savvy. The $1 trillion economy has more than 350 million active cellphones—more than the country’s population of 270 million, according to government data.
The Industry Ministry said in early October that Apple was only investing IDR 1.5 trillion ($95 million) in Indonesia, below its commitment of IDR 1.7 trillion. Apple is building four developer academies in the country in lieu of building local manufacturing facilities, although Chief Executive Officer Tim Cook said in April that the company was considering the feasibility of doing so.
Apple representatives did not immediately respond to an emailed request for comment outside regular US business hours.
Competing cellphone manufacturers such as Samsung Electronics Co. and Xiaomi Corp. has set up a factory in Indonesia to comply with domestic content regulations introduced in 2017. Another way to increase local content is to source raw materials or employ workers domestically.
Indonesia has a long track record of implementing trade restrictions to encourage foreign companies to produce more goods domestically, although the level of success has been mixed.
The government tightened import regulations on a large number of products this year, leading to shortages of goods such as laptops and car tires, and leading to backlogs at ports. However, a long-standing ban on the export of mineral ores such as nickel has led to the rapid development of the battery sector in the country.
Around 9,000 iPhone 16 units have so far entered Indonesia, carried directly by passengers and crew or sent by post, said the Ministry of Industry. These are only allowed for personal use and cannot be traded, he said. Even this route may not be easy for interested iPhone 16 buyers. Since 2020, Indonesia has required all cellphones purchased abroad to be registered with the government and will be subject to large taxes.
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