Indonesia Calls Apple’s $100-Million Investment Offer Unfair

Apple's proposal to invest $100 million (roughly Rs. 842 crore) in Indonesia hasn't met “fairness” principles, a top government official said, signaling Jakarta is seeking further negotiations before lifting a ban on domestic iPhone 16 sales.

The amount falls short of what the US tech firm has invested in other countries, Industry Minister Agus Gumiwang Kartasasmita told reporters on Monday. 

For instance, Apple has funneled more than IDR 244 trillion ($15 billion or roughly Rs. 1,26,412 crore) toward manufacturing facilities in Vietnam, where its market sales total just roughly 1.5 million units, the official said. In comparison, Apple has only invested about 1.5 trillion rupiah in developer academies in Indonesia, where it sells some 2.5 million units.

The latest comments indicate more hurdles ahead for Apple as it seeks to lift a ban on selling its flagship iPhone 16 in Southeast Asia's largest economy. Rival phone makers like Samsung Electronics and Xiaomi have invested IDR 8 trillion and IDR 55 trillion, respectively, to manufacture their devices onshore, the minister added.

“We want Apple to return to do business here but we need a fair resolution,” Kartasasmita said.

Indonesia's government blocked sales of the iPhone 16 on the grounds that Apple hasn't met a domestic content requirement for smartphones and tablets.

The Cupertino, California-based company's IDR 1.5 trillion investment in the country falls short of the IDR 1.7 trillion it pledged in 2023 — a discrepancy of about $10 million “which is so small,” the minister said on Monday. In an attempt to lift the sales ban, Apple made an upsized $100-million investment offer, Bloomberg News reported this month.

“We want Apple to send negotiation teams to meet us,” Kartasasmita said.

Among the government's requests are for the US tech giant to deliver the remaining $10 million (roughly Rs. 84 crore) from its investment pledge last year, and come up with a better offer for 2024-2026. The minister added that their top priority is still to get the company to open a plant in Indonesia.

The bans are the latest example of Indonesia playing hardball as new President Prabowo Subianto seeks to pressure international firms to boost local manufacturing, which would be a boon for domestic industries. The country has also banned sales of Alphabet Inc.'s Google Pixel phones over a similar lack of investment.

Last year, Indonesia announced regulations forcing ByteDance's TikTok to split its shopping feature from the popular video-scrolling service, a bid to shield its retail sector from cheap Chinese-made goods. 

While Apple ranks outside the top six smartphone brands in Indonesia, the country is a potential growth market with a young, increasingly tech-savvy population. The $1 trillion (roughly Rs. 84,27,567 crore) economy has over 350 million active mobile phones, outnumbering the nation's 270 million population, according to government data.

“We expect this Apple issue can be resolved soon as they also have big interest in doing business here,” Kartasasmita said.

© 2024 Bloomberg LP

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