Indonesian regulators last week rejected a proposal from Apple that it hoped would pave the way for iPhone 16 sales in one of Southeast Asia’s biggest markets.
Indonesia is required to produce 40% of the parts used in some smartphones domestically. In response, Apple proposed a $1 billion investment in a manufacturing facility on the Indonesian island of Batam to produce parts for AirTag tracking devices.
However, Indonesia’s Industry Minister Agus Gumiwan said that since the AirTag is not an iPhone component, the facility will not count toward the locally produced parts rules for the iPhone 16, which was released in September 2024, before the local sales ban began. pointed out. announced.
The regulation, locally known as “Domestic Component Level” (TKDN), requires locally produced components as essential parts of devices such as smartphones, tablets and computers.
Jakarta-based smartphone market analyst Aryo Meidiant Aji told DW that Apple seems to “not understand” the rules of the TKDN scheme.
“AirTag is an accessory sold separately from the phone itself, so even if we invest a lot of money, AirTag will not contribute to the TKDN ratio,” he said.
“Ideally, Apple would establish a factory in Indonesia that could produce components domestically and include them in the sales packaging of Apple devices, such as adapters, data cables, earphones, cases, and even packaging and manuals. Even simple components require their own parts’ evaluation weight. ”
Indonesia eyes further technology investment
Nevertheless, Apple’s Batam Airtag production facility is scheduled to open next year, according to Indonesian Investment Minister Rosan Roeslani.
This will be Apple’s first production facility in Indonesia, which aims to compete with other Southeast Asian countries such as Vietnam as a technology production hub.
However, there are concerns that the government is not making Indonesia an easy choice.
Muhammad Habib, a Jakarta-based international relations expert at the center, said: “While we understand the government’s intention to increase local ingredients in products sold in Indonesia, we need multinational companies to understand the options and the necessary ecosystem.” “We cannot force compliance without providing the necessary information.” Strategic and International Studies (CSIS).
“Playing hard for acquisitions can send a negative signal to the international community. We are in very high demand, but we are not able to meet the needs of the company,” he said. told DW.
“Furthermore, Singapore and Malaysia recently created special economic zones focused on the production of high-tech products and integration into global technology supply chains,” Habib said.
Compared to Apple’s original $1 billion investment proposal in Indonesia, the investment in Vietnam, where it operates multiple production facilities, will be nearly $16 billion. India is also an investment destination.
Apple had originally proposed a $100 million parts factory to meet local parts demand, but the government insisted that was not enough.
“We have made an assessment and this (proposal) does not meet the principle of fairness,” Industry Minister Gumiwan said in November, comparing Apple’s proposal to major investments in Vietnam and Thailand.
Indonesia’s “equity principle” requires companies to compare how they invest in other countries while contributing to local jobs and economic development.
CSIS’s Muhammad Habib said Indonesia needs to think about how to leverage its influence with US-based tech giants following the inauguration of US President-elect Donald Trump.
“During President Trump’s term, business interests have tended to move closer to him to secure more incentives and other forms of support in the economy, geopolitics, and other areas. “Not only do we lose, we risk,” he said, “but we also face other undesirable outcomes.”
Despite being a potentially huge market for Apple, most of the smartphones used in Indonesia are made by South Korean Samsung or Chinese manufacturers such as OPPO.
Non-compliant smartphones purchased abroad can still be brought into Indonesia as long as the user pays the taxes. Indonesia has also banned the sale of Google Pixel smartphones because they do not meet local parts regulations.
“Apple’s market share in Indonesia is not large, especially for new products. A larger share is occupied by some older products. “This could lead to a significant shift to Mr. Ario is a market analyst.
Editor: Wesley Rahn
Based on material from Reuters.
