Indonesia has blocked Apple Inc. from selling its latest iPhones in the country, citing the company’s failure to meet local investment requirements. The Ministry of Industry stated that the iPhone 16, which was launched in September, cannot be marketed domestically as Apple Indonesia has not met the 40% domestic content requirements for smartphones and tablets.
While Apple has seen success in other Asian markets like China, where initial sales of the iPhone 16 have been strong, the company ranks outside the top six smartphone brands in Indonesia. However, Indonesia is seen as a potential growth market due to its young and increasingly tech-savvy population. With over 350 million active mobile phones in a population of 270 million, Indonesia presents a significant market for smartphone manufacturers.
Apple’s investment in Indonesia falls short of the country’s expectations, with the company having only invested 1.5 trillion rupiah ($95 million) as opposed to the committed 1.7 trillion rupiah. Apple has built developer academies in Indonesia but has not established a local manufacturing facility, although CEO Tim Cook has expressed interest in exploring the possibility.
Rival phone makers like Samsung and Xiaomi have complied with Indonesia’s domestic content regulations by setting up factories in the country. These regulations, introduced in 2017, aim to boost local content by encouraging companies to source materials locally or hire Indonesian workers.
Indonesia has a history of using trade restrictions to incentivize foreign companies to produce more goods domestically. While this approach has had mixed results, the country has seen success in sectors like the battery industry due to its ban on the export of mineral ores like nickel.
Despite the restrictions, around 9,000 iPhone 16 units have entered Indonesia through various channels, but they are only allowed for personal use and cannot be traded. Indonesian regulations also require phones purchased overseas to be registered with the government and are subject to hefty taxes.