Apple Inc., one of the world’s largest technology companies, is facing a significant hurdle in Indonesia as the government has banned the sale of its latest iPhone 16 model. This decision stems from Indonesia’s stringent Domestic Component Level (TKDN) certification process, which mandates foreign companies to meet a 40% local content requirement to operate within the country. The regulation aims to boost domestic manufacturing and economic growth. For Apple, compliance with this policy involves commitments to establish research and development facilities, popularly known as Apple Academies, across Indonesia. However, the tech giant’s previous efforts have fallen short of the government’s expectations, leading to a standoff that now sees Apple offering an increased investment to resolve the issue.
Apple’s $100 Million Proposal
In a bid to overturn the iPhone 16 ban, Apple has significantly increased its investment offer in Indonesia to $100 million, a substantial jump from its previous $10 million proposal. This funding, intended to span over two years, would focus on bolstering research and development for its smartphones in the country. The original plan involved a smaller-scale investment in an accessories and components factory in Bandung, but Indonesian authorities rejected it, citing the need for greater alignment with local content rules.
The Indonesian Ministry of Industry, which imposed the ban last month, has indicated that Apple must restructure its investment plan to prioritize smartphone-related R&D activities. The government claims that Apple’s investment to date, amounting to 1.5 trillion rupiah (approximately $95 million), has not met its pledged 1.7 trillion rupiah commitment under the TKDN guidelines. The iPhone maker’s predicament highlights Indonesia’s increasingly assertive stance under President Prabowo Subianto, who is pushing for foreign companies to contribute more meaningfully to domestic industries.
Indonesia’s Aggressive Tactics to Spur Local Investment
The ban on Apple’s iPhone 16 aligns with a broader strategy by Indonesia to pressure international firms into increasing local investments. Similar measures were taken against Google Pixel, which was also barred due to insufficient compliance with local content requirements. These actions reflect the government’s intent to strengthen domestic manufacturing and reduce reliance on imported goods. Indonesia’s history of leveraging hardball tactics is evident, as seen in its 2023 ban on ByteDance’s TikTok, which ultimately led the company to invest $1.5 billion in a joint venture with Tokopedia, part of Indonesia’s GoTo Group.