Apple AAPL.US reportedly spent $100 million in an attempt to lift the ban on iPhone 16 in Indonesia.
1min read Apple AAPL.US raised its investment proposal by nearly ten times to lift the sales ban on iPhone 16 in Indonesia, but the Indonesian government asked Apple to change its investment plan and focus more on the research and development of smartphones in the country, a strategy by the new government to pressure international companies to increase local manufacturing.
The company plans to invest nearly $100 million in Indonesia over two years in its latest proposal, a significant increase from the previous $10 million investment plan, according to people familiar with the matter. The change came after the Indonesian Ministry of Industry blocked the sales permit for iPhone 16, asking Apple to adjust its investment focus and pay more attention to the research and development of smartphones in Indonesia. The ministry has yet to make a final decision on Apple's latest proposal.
Apple executives flew to Jakarta to meet with the Indonesian Industry Minister, but were told he was not available and had to meet with the director general of the ministry. Meanwhile, the Indonesian Ministry of Industry and Information Technology also banned the sales of iPhone 16 due to Apple's local subsidiary failing to meet the 40% local content requirement for smartphones and tablets. Apple responded with a new investment plan to address the issue.
The Indonesian government has been strict on Apple's investment requirements, previously banning the sales of some of its products due to Apple failing to meet its promised investment. The tough strategy has been continued under the new government of President Prabowo Subianto, aimed at pressuring international companies to increase local manufacturing and promote domestic industries.
Former President Joko Widodo also adopted a similar strategy, successfully pressuring ByteDance's TikTok to invest in Tokopedia, the e-commerce arm of GoTo Group, an Indonesian company.
Apple's investment in Indonesia aims to reach the country's 278 million consumers, over half of whom are young and tech-savvy. However, the tough strategy in Indonesia may also deter other companies, affecting their business expansion and investment willingness in the country, which could pose potential risks to Prabowo's government in attracting foreign investment to develop the economy and fund policy spending.
While the specifics of Apple's investment plan and target are yet to be clarified, Apple typically supports local assembly or component partners such as Foxconn, which would help produce or supply key components for iPhones and iPads. Apple and the Indonesian Ministry of Industry have yet to comment on the progress of the latest proposal.