Indonesia has banned Apple Inc. from selling its newest iPhones in Southeast Asia's largest economy, stating that the company has not fulfilled local investment obligations.
The iPhone 16, launched in September, cannot be marketed domestically as local unit PT Apple Indonesia hasn't fulfilled the country's 40% domestic content requirements for smartphones and tablets, the Ministry of Industry said in a statement on 25 Oct. Apple's older products can still be sold in Indonesia, reports The Business Standard.
This creates a challenge for Apple, which has enjoyed strong early sales of its flagship product in other Asian markets like China. Although it doesn't rank among the top six smartphone brands in Indonesia, the country presents a promising growth opportunity due to its youthful and increasingly tech-savvy population. With over 350 million active mobile phones—exceeding the country's 270 million residents—Indonesia's $1 trillion economy offers considerable potential, according to government data.
The industry ministry said earlier in October that Apple has only invested 1.5 trillion rupiah ($95 million) in Indonesia, below its commitment of 1.7 trillion rupiah. Apple built four developer academies in the country in lieu of establishing a local manufacturing facility, though Chief Executive Officer Tim Cook said in April that the company was looking into the feasibility of doing so.
Apple representatives didn't immediately respond to an emailed request for comment outside regular US business hours.
Rival phone makers like Samsung Electronics Co. and Xiaomi Corp. have set up factories in Indonesia to comply with the domestic content regulations introduced in 2017. Other ways to boost local content include sourcing materials or hiring workers in the country.
Indonesia has a long track record of using trade restrictions to push foreign companies to produce more of their goods domestically, though to mixed success.
This year, the government has imposed stricter import regulations on a broad range of products, resulting in shortages of items like laptops and car tires, and creating congestion at its ports. However, its longstanding ban on the export of mineral ores such as nickel has spurred rapid growth in its battery sector.
About 9,000 iPhone 16 units have so far entered Indonesia, hand-carried by passengers and crew or delivered by post, the industry ministry said. These are only allowed for personal use and cannot be traded, it said. Even this route may not be easy for interested iPhone 16 buyers though. Indonesia has since 2020 required all phones purchased overseas to be registered with the government and those are subject to a hefty tax.
Bd-pratidin English/ Afia
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