iPhone 16 Series Sales in Indonesia Blocked Over Unmet Investment Requirements

Indonesia blocked Apple Inc. from selling its latest iPhones in Southeast Asia's largest economy, saying the company has yet to meet local investment requirements. The iPhone 16, launched in September, cannot be marketed domestically as local unit PT Apple Indonesia hasn't fulfilled the country's 40% domestic content requirements for smartphones and tablets, the Ministry of Industry said in a statement on Oct. 25. Apple's older products can still be sold in Indonesia.

That's a road bump for Apple, which has enjoyed healthy initial sales of its flagship product in other Asian markets such as China. While Apple ranks outside the top six smartphone brands in Indonesia, it's a potential growth market with a young, increasingly tech-savvy population. The $1 trillion economy has over 350 million active mobile phones — much more than the nation's 270 million population, according to government data.

The industry ministry said earlier in October that Apple has only invested 1.5 trillion rupiah ($95 million) in Indonesia, below its commitment of 1.7 trillion rupiah. Apple built four developer academies in the country in lieu of establishing a local manufacturing facility, though Chief Executive Officer Tim Cook said in April that the company was looking into the feasibility of doing so.

Apple representatives didn't immediately respond to an emailed request for comment outside regular US business hours.

Rival phone makers like Samsung Electronics Co. and Xiaomi Corp. have set up factories in Indonesia to comply with the domestic content regulations introduced in 2017. Other ways to boost local content include sourcing materials or hiring workers in the country.

Indonesia has a long track record of using trade restrictions to push foreign companies to produce more of their goods domestically, though to mixed success.

The government tightened import rules on a wide swathe of products this year, leading to a shortage of items such as laptops and car tires, and causing a pile-up in its ports. However, its long-running ban on the export of mineral ores like nickel have led to the rapid development of its battery sector.

About 9,000 iPhone 16 units have so far entered Indonesia, hand-carried by passengers and crew or delivered by post, the industry ministry said. These are only allowed for personal use and cannot be traded, it said. Even this route may not be easy for interested iPhone 16 buyers though. Indonesia has since 2020 required all phones purchased overseas to be registered with the government and those are subject to a hefty tax.

© 2024 Bloomberg L.P.

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