A few days ago, Apple suffered a setback in Indonesia when Indonesia banned the sale of the iPhone 16. The ban came after Apple failed to comply with local manufacturing regulations that require companies to make 40% of their products’ components in Indonesia. Moreover, Apple did not keep its investment commitments, investing only 1.5 trillion rupiah ($95 million) instead of the promised 1.71 trillion rupiah ($108.7 million).
To quickly solve the problem of the iPhone ban in Indonesia, Apple has proposed investing $10 million in the country. Specifically, the investment will be made in a factory in Bandung, southeast of Jakarta, where accessories and components for Apple devices will be manufactured.
The proposal, submitted to Indonesia’s Industry Ministry, is still under review. Bloomberg sources said the agreement is still under negotiation and subject to change.
If all goes according to plan, the iPhone ban would be lifted and Apple could start selling its phones in Indonesia again. Moreover, local production could improve its market share, which currently ranks sixth at 12.9% according to StatCounter, and even put it in the top five.
Indonesia Manufacturing Policy
For Indonesia, the agreement could help strengthen the local industry. This is exactly what the government hopes these production requirements will achieve. Also, since Indonesia also recently banned the sale of Google’s Pixel phones, Google may want to follow Apple’s lead and bring its devices back to Indonesia.
However, the restrictions may not have had the results the government hoped for. These requirements have been in place for seven years, but Indonesia’s manufacturing industry has declined slightly. Trading Economics estimates that manufacturing’s share of Indonesia’s GDP will fall to 18.7% by 2023 from 20.2% in 2017, when the regulations were fully implemented.
While the intentions behind these restrictions may be good, they could also discourage international companies from setting up shop there. But with a population of over 283 million, Indonesia remains the world’s fourth-largest market. This makes it a market that big companies cannot afford to ignore, despite the challenges.
