27 NOV 2024 / FINANCE

Did Indonesia Just Put Apple in a Tight Spot?

“Fair is fair,” and Indonesia isn’t feeling the love from Apple’s $100-million investment proposal. The Southeast Asian giant has pumped the brakes on iPhone 16 sales, saying the offer falls short of what’s needed to open up the country’s market. Apple has thrown billions into Vietnam, 244 trillion rupiah ($15 billion), to be exact—despite selling just 1.5 million devices there. But in Indonesia, where Apple sells around 2.5 million units, their investment barely scratches the surface at 1.5 trillion rupiah. To make matters worse, Apple came up $10 million short on its 2023 pledge of 1.7 trillion rupiah, prompting Indonesian officials to call for accountability. Meanwhile, competitors like Samsung and Xiaomi have poured 8 trillion rupiah and 55 trillion rupiah, respectively, into local manufacturing. Indonesia’s Industry Minister, Agus Gumiwang Kartasasmita, put it bluntly: “We’d like Apple to return, but fairness matters.”

The iPhone 16 Ban: What’s at Stake?

The Indonesian government is playing by its rules, citing unmet domestic content requirements as the reason for blocking iPhone 16 sales. Apple’s proposal to invest $100 million might seem impressive, but officials want more. They’ve made it clear: no lifting the ban without a better deal. Apple’s problems don’t end here. Kartasasmita added, “We want Apple to send their negotiation teams,” emphasizing the need for a stronger plan for 2024 through 2026. Topping their wishlist? A commitment to building a manufacturing plant in Indonesia. Apple’s troubles don’t end there. From a $89 million fine over the Apple Card fiasco with Goldman Sachs to Warren Buffett trimming his Apple stake by $46 billion, is the tech giant losing its edge?

Why Is Indonesia Digging In?

Under President Prabowo Subianto, Indonesia is making big moves to boost local industries. And it’s not just Apple feeling the heat even Google Pixel phones are banned for similar reasons, and TikTok was forced to separate its shopping feature from its scrolling app to protect local businesses. It’s all part of a push to ensure that international firms contribute meaningfully to Indonesia’s economy instead of simply reaping the benefits.

A Market That’s Hard to Ignore

While Apple isn’t among the top six smartphone brands in Indonesia, the market is too promising to pass up. The $1 trillion economy is home to a young, tech-savvy population with over 350 million active mobile phones—outnumbering its 270 million residents. Apple may not dominate the space yet, but the growth potential is undeniable. Kartasasmita expressed optimism, saying, “We’re hopeful the Apple issue will be resolved soon. They have a strong interest in doing business here.”

Step Up, Apple!

Indonesia’s no-nonsense approach to Apple’s investment sends a strong message: this isn’t just about money—it’s about long-term commitment. With Samsung and Xiaomi already setting the bar high, Apple has a decision to make. Will they up the ante and invest in Indonesia’s future, or risk missing out on one of Southeast Asia’s biggest opportunities? One thing’s for sure: Indonesia isn’t settling for second best. For more insights follow us and subscribe to our weekly newsletter for expert analysis and updates!