New iPhone still banned from sale in Indonesia despite Apple’s investments

Apple is still banned from selling its latest iPhone in Indonesia despite striking a deal to build a local manufacturing facility in the country, a minister said yesterday.

In late October, the Indonesian government banned sales of Apple’s new iPhone 16 devices, which first went on sale in September, saying the tech giant had failed to comply with local content rules. This requires certain smartphone handsets contain at least 40 percent locally manufactured components.

Industry Minister Agus Gumiwang Kartasasmita said that despite this week’s announcement that the US tech giant had agreed to open a factory in Indonesia to produce its AirTag tracking device, it would still be excluded from sales of the iPhone 16, Reuters reported yesterday.

“There is no basis for the ministry to issue a local content certification as a way for Apple to get permission to sell the iPhone 16 because (the facility) has no direct relationships,” he said, according to the report the news agency. He added that only phone components could meet the local content requirement.

The minister’s comments came after two days of meetings with an Apple delegation led by Nick Ammann, the company’s vice president of global government affairs, to discuss the company’s investment plans in Indonesia – including the ban on sales from iPhone 16.

On Tuesday, after meetings with the Apple delegation, Investment Minister Rosan Roeslani announced that Apple had “fully committed to the first phase of construction” of the AirTag production facility, which is expected to start operations in 2026. The factory, which will be located on the Indonesian island of Batam, near Singapore, is part of a $1 billion investment that Apple has pledged to make in Indonesia. In response to the October ban, Apple has held several rounds of talks with the Indonesian government.

It is clear that Indonesia is determined to use its considerable influence – it is the world’s fourth most populous country as well as its country. fourth largest mobile market – to take maximum advantage of one of the most powerful companies in the world.

To meet Indonesian demands, Apple initially offered to invest $100 million in an accessories and parts factory in the country. But the Indonesian government said this was insufficient to overturn the iPhone 16 ban, with one minister comparing the proposal to Apple’s much more substantial investments in neighboring Vietnam and Thailand.

According to subsequent reportsThe Indonesian Ministry of Industry did this asked that Apple complies with four ‘fairness principles’. This would require the tech giant to assess whether its investments in Indonesia are in line with its investment activities in other Asian countries, such as Vietnam and India, and in line with those of Apple’s competitors. The principles also require Apple to ensure that investments add value and create new jobs in Indonesia.

The fact that Indonesia continues to make tough deals in its dealings with Apple is just the latest example of its willingness to wield state power to ensure the development of local industries and/or to mollify key domestic constituencies. I’ve previously written about the government’s ban on raw nickel exports, which is intended to encourage foreign investment in downstream processing facilities, and the restrictions on the e-commerce site Temu, which Indonesian officials fear will undermine local businesses .

In another example yesterday, Airlangga Hartarto, the Coordinating Minister of Economy, said announced that Jakarta plans to require natural resource exporters to keep their export earnings in the country for at least one year, up from the current three months. He said the change was aimed at “strengthening the country’s foreign exchange reserves,” according to Reuters.