Apple Proposes $10 Million Investment in Indonesia Amid iPhone 16 Ban

Apple Inc. has submitted a proposal to invest nearly $10 million in Indonesia as part of its efforts to expand its manufacturing footprint in the country. The US tech giant's move comes as it negotiates to reverse the Indonesian government’s recent ban on sales of its newest iPhone 16 model.

Last month, Indonesia’s Ministry of Industry blocked the iPhone 16 from the market, citing Apple’s failure to meet the country’s 40% domestic content requirement. To address the issue, Apple has proposed establishing a manufacturing facility in Bandung, southeast of Jakarta, through partnerships with its suppliers. According to sources close to the matter, this factory would produce accessories and components for various Apple products.

The ministry is currently reviewing Apple’s investment plan, which is still tentative and could be subject to changes. A decision on the proposal is expected soon, although both Apple and the Ministry of Industry have declined to comment.

Context: Apple’s Investments in Indonesia

Indonesia’s government reported that Apple has already invested approximately 1.5 trillion rupiah (about $95 million) in the country, including initiatives like developer academies. However, this falls short of the 1.7 trillion rupiah commitment Apple previously made.

As part of its efforts to enforce the ban, Indonesian authorities have also pressured major e-commerce platforms like Tokopedia and TikTok to remove listings for the iPhone 16. Failure to comply could result in legal repercussions for these platforms.

Indonesia’s Push for Local Production

Indonesia has a history of implementing strong trade policies aimed at compelling foreign companies to increase domestic production. Earlier this year, the government introduced import restrictions on a wide range of items, from electronics to chemicals, to encourage local manufacturing. While this approach has helped boost local industries, it has also sparked concerns from international businesses.

For example, LG Electronics Inc. raised concerns about disruptions to their supply chain, which is essential for local production. Indonesia’s balancing act between protecting its domestic industries and attracting foreign investment remains a challenge.

Despite efforts to position itself as a regional manufacturing hub, Indonesia’s manufacturing sector’s contribution to GDP has been shrinking, declining from 21.1% in 2014 to 18.7% in 2023.

iPhone 16 Ban and Broader Trade Policies

The iPhone 16 ban is part of President Prabowo Subianto’s broader strategy to protect domestic industries by requiring foreign companies to meet local content requirements. Alongside Apple, Google’s Pixel has also faced restrictions for similar reasons.

These actions follow the trade policies of former President Joko Widodo, who previously blocked Chinese tech companies like ByteDance Ltd. from the local market. ByteDance later invested $1.5 billion in a joint venture with Tokopedia to meet Indonesia's local content requirements.

While Apple’s proposed $10 million investment may seem modest, gaining access to Indonesia’s growing, tech-savvy population of 278 million could be highly profitable. However, Jakarta’s assertive stance on local content could deter potential investors, especially as companies seek to diversify their supply chains and reduce their reliance on China.