Indonesia prohibited the sale of Apple’s flagship device last month.
Apple’s suppliers will set up a plant producing AirTags on the island of Batam
Photo Credit: Apple
Apple is close to getting Indonesia to lift its ban on iPhone 16 sales, after President Prabowo Subianto gave his approval for the government to accept a $1 billion (roughly Rs. 8,511 crore) investment from the US tech giant, according to people familiar with the matter.
Indonesia warmed to Apple's proposal after Prabowo was briefed on it over the weekend at a meeting that discussed the tug-of-war between the government and Apple, the people said, asking not to be identified discussing talks that were private. The country prohibited the sale of Apple's flagship device last month, saying Apple had failed to comply with domestic content requirements for smartphones and tablets.
At the meeting, Prabowo greenlit the government to accept Apple's proposal and urged his cabinet to obtain more investments in future, the people said.
The US technology giant secured Prabowo's approval based on its expanded investment plans, which Apple had presented to the government in an official written proposal. An added key aspect is that one of Apple's suppliers will set up a plant producing AirTags on the island of Batam, the people said.
The plant is expected to employ around 1,000 workers initially and Apple has chosen Batam, about a 45-minute ferry ride from Singapore, because of its free-trade zone status, which exempts companies from value-added and luxury taxes, as well as import duties, the people said.
The plant will eventually account for 20 percent of global production of AirTags — a device that allows users to track their luggage, pets or other belongings.
Another part of the $1 billion (roughly Rs. 8,511 crore) investment will go toward setting up a plant in Bandung, about three hours southeast of Jakarta, to make other types of accessories, as well as funding Apple academies in the Southeast Asian nation, which equip students with tech skills like coding.
Prabowo directed his Coordinating Ministry of Economic Affairs to take the lead and wrap up the deal. But his government has yet to give Apple a timeline as to when iPhone 16 sales will be allowed, and the plans could change given Indonesia has in the past backtracked on decisions, some of the people said.
The President's office, Apple and the Coordinating Ministry for Economic Affairs didn't immediately respond to requests for comment.
Should Indonesia officially accept Apple's offer, it would be a win for Prabowo, who is seeking to secure more foreign investments to fund his policy pledges.
It would also signal that the country's hardball tactics to get major foreign companies to develop their goods in Indonesia as part of efforts to boost local manufacturing appear to be working. By offering to invest in the country, Apple is seeking unfettered access to Indonesia's 278 million consumers, more than half of which are under the age of 44 and tech savvy.
Nonetheless, the case — which has been closely watched by the foreign business community — also risks scaring away other firms who fear they too could be strong-armed by the government into scaling up operations or otherwise face repercussions.
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