Just a few days ago, Indonesia announced that the iPhone 16 and the Apple Watch Series 10 were banned from sale in Indonesia. This is due to Apple not meeting local investment regulations for foreign companies, in which a minimum of 40% of parts manufactured come from Indonesian producers. Specifically, this can be satisfied by research and development, software development, or local manufacturing. Alternatively, companies can create other innovative products in Indonesia to satisfy the requirement. Apple previously committed to investing approximately $110 million into local research and development infrastructure in the country, but the company has not finalized its investment yet, with a shortfall of about $14.75 million. The 40% product value requirement is necessary to obtain the Domestic Component Level (TKDN) certification, which will subsequently allow the distribution and marketing of the iPhone 16 and the Apple Watch.
However, the Indonesian ministry recently reported that 9,000 iPhones had already entered the country. Due to the timeliness of the statement, the new iPhones entered the country legally and can be used. Trading the phones commercially would be considered illegal, the ministry spokesperson Febri Hendri Antoni Arif remarked on Friday, October 25. Older Apple products are acceptable to sell, and visitors to Indonesia can use the phones.
In perspective, Indonesia is not a major buyer for Apple compared to other countries. For comparison, Apple sold about 3.4 million iPhones last year in Indonesia but sold around 235 million iPhones globally. Android dominates the Indonesian market at about 87 percent, but Apple has had a growing presence in recent years.
Overall, Indonesia is trying to bring in more foreign investment by forcing companies to produce a considerable portion of their products domestically as opposed to simply importing them. At first, this might seem counterintuitive, since Indonesia would be losing import taxes on goods into the country. Perhaps this is an example of “addition by subtraction,” where the country wants to be more domestically independent rather than relying so much on outside sources to fuel its economy. As such, Indonesia wants to grow its economy internally, forcing companies to have a more committed approach to offering their services to Indonesian citizens. On a separate note, an increase in “Made in Indonesia” can add more pride and unity to the nation since there would be more of the feeling of “we did it” and not “they did it.”
On Apple’s part, I believe the company should continue investing in building research and development factories in Indonesia so their products can be more affordable for the working class, and as such, increase the competition against Android. This will create a new market for Apple, in addition to the other major countries (United States, China, India, United Kingdom, etc.).
From a country economically shattered in 1965 with almost half the population living in poverty to the mid-1990s cutting poverty to 20 percent, and now sitting at approximately 9.03 percent, Indonesia is one of the fastest economically growing countries in Southeast Asia that has tremendous opportunities in the future. Also, population growth is a consideration. When Indonesia gained independence in August 1945, the estimated population was 68.5 million people. In 2024, the population is around 284 million, making the country the fourth largest in the entire world. This is important because as Indonesia tries to make itself more promising in foreign investment and secures more economic independence, so too will the lives of the people.
https://www.theguardian.com/technology/2024/oct/28/indonesia-apple-iphone-16-ban
https://www.businessinsider.com/apple-indonesia-iphone-16-blocked-sales-2024-10
https://www.ft.com/content/698d07af-c163-4bc9-9a30-b82ca479e3e8