Indonesia has put a hold on Apple Inc.’s plans to sell its latest iPhone 16 models in the country, citing unmet local investment requirements. The iPhone 16, launched globally in September, is barred from the Indonesian market until Apple’s local unit, PT Apple Indonesia, complies with regulations mandating that at least 40% of smartphone components be sourced or produced domestically, according to an announcement by Indonesia’s Ministry of Industry on October 25. While the iPhone 16 is restricted, older Apple devices are still available for sale.
This setback for Apple comes despite strong demand for the iPhone 16 in other major Asian markets, including China. While Apple remains outside the top six smartphone brands in Indonesia, the Southeast Asian economy is seen as a high-potential growth market, particularly with a young, tech-savvy population. Indonesia, a nation with a $1 trillion economy and a population of 270 million, is home to over 350 million active mobile phones — reflecting the rapidly growing demand for mobile devices, according to government data.
The Ministry of Industry stated that Apple’s investment in Indonesia, currently at 1.5 trillion rupiah ($95 million), falls short of the pledged 1.7 trillion rupiah. To meet some of the local content requirements, Apple has established four developer academies across Indonesia. However, the company has yet to build a local manufacturing facility, though Apple CEO Tim Cook mentioned in April that feasibility studies for such a facility were ongoing.
Apple has not yet provided an official response to the sales ban.
In contrast, competitors such as Samsung and Xiaomi have established local production facilities to comply with Indonesia’s domestic content requirements, first introduced in 2017. Besides setting up factories, foreign companies can also meet local content requirements through material sourcing or by hiring local labor, helping to ensure a larger portion of the manufacturing process is based in Indonesia.
Indonesia has historically leveraged trade restrictions to encourage foreign companies to localize production. This approach has yielded mixed results: import restrictions on a variety of products this year, including laptops and car tires, led to supply shortages and port congestion. However, Indonesia’s longstanding export bans on mineral ores like nickel have successfully driven rapid growth in its battery manufacturing sector.
Despite the restrictions, the Indonesian Ministry of Industry reported that around 9,000 iPhone 16 units have already entered the country through informal channels, such as hand-carrying by travelers or mail deliveries. These units are intended strictly for personal use and cannot be resold. However, even this unofficial route presents challenges for iPhone 16 buyers, as Indonesian law requires all phones purchased overseas to be registered with the government and subjects them to a substantial import tax.
With an increasing focus on local manufacturing and tech investment, Indonesia continues to shape its market landscape, creating both obstacles and opportunities for global tech giants like Apple looking to tap into one of Southeast Asia’s most promising markets.
-Bloomberg
