Local newswires, including Jakarta Globe, are reporting that Indonesia’s Industry Minister, Agus Gumiwang Kartasasmita, will summon Apple for negotiations on its unfulfilled USD 10 million investment commitment (approximately IDR 157 billion) for 2023 and its most recent USD 100 million proposal for 2024 to 2026. The talks aim to ensure compliance with domestic investment and local content requirements, a prerequisite for selling the iPhone 16 in the country.
“We will soon email Apple to summon their representatives,” Minister Agus said on Monday (25/11/24,) adding that the company must align its investments with Indonesia’s fairness principles and economic goals.
The Ministry has criticized Apple’s USD 100 million proposal, which includes expanding the Apple Developer Academy and building accessory manufacturing facilities in Bandung, West Java. According to Agus, the proposal fails to meet four fairness criteria: comparisons with Apple’s investments in other countries, contributions to state revenue, job creation, and parity with investments by other electronics brands in Indonesia, according to Jakarta Globe.
Apple’s initial USD 10 million commitment was directed at establishing an accessory facility in Bandung. The newly proposed USD 100 million would be implemented over two years, with details on the allocation of USD 90 million yet to be disclosed. Reports suggest the investment may involve Apple’s manufacturing partner, Foxconn, potentially setting up assembly operations in Indonesia.
Agus has urged Apple to build a production facility in the country, eliminating the need for periodic investment proposals. “This would not only meet the fairness principle but also strengthen local economic development,” he said.
Jakarta Globe reports that the Ministry is also revising Ministerial Regulation No. 29/2017, which governs local content requirements for mobile phones, handheld computers, and tablets. The revisions aim to address changes in the industry and ensure compliance with the TKDN (local content level) threshold of 35 percent, mandatory for selling the iPhone 16 in Indonesia.
Apple’s failure to meet TKDN requirements has resulted in a ban on iPhone 16 sales in Indonesia. The Trade Ministry has prohibited online platforms from listing the device, while the Industry Ministry plans to block its IMEI, effectively rendering it inoperable, says Jakarta Globe.
As part of its TKDN strategy, Apple has focused on innovation and human capital development. It currently operates three Apple Developer Academies in Indonesia, in BSD (Banten), Sidoarjo (East Java), and Nongsa (Batam), and plans to establish a fourth in Bali. However, the Bali project, pledged during Apple CEO Tim Cook’s visit to Indonesia, remains unfulfilled.
Despite the proposed investments, Apple’s USD 100 million commitment falls short of the IDR 1.7 trillion target set by the Ministry. Agus maintains that equitable and impactful investments are essential to ensuring compliance and fostering long-term growth in Indonesia’s technology sector, reports Jakarta Globe.
The iPhone 16, launched globally in September, remains absent from the Indonesian market due to regulatory hurdles.
Source: Jakarta Globe
Stock photo by Amanz on Unsplash
