Despite Apple’s commitment to invest a staggering billion dollars into Indonesia, the iPhone 16 remains prohibited from being sold in the country.
Initially, Apple made offers of $10 million and then $100 million, which the Indonesian government rejected. Eventually, the tech giant proposed a billion-dollar manufacturing investment, aligning with the government’s demands for access to its market.
A Look at the Journey So Far
In recent times, governments of populous nations have become increasingly aware of leveraging negotiations to gain significant benefits in return for granting Apple access to their markets.
Take India, for instance, where Apple was unable to open retail locations until it established extensive manufacturing operations within the country.
Initially, the Indonesian government asked for a more modest investment of $109 million to establish a developer academy and an additional $10 million for manufacturing. However, as Apple fell short of these expectations, the government took a harder stance. Ultimately, it banned the sale of the iPhone 16 and demanded a much larger investment.
Following this, Apple raised its offering to $100 million, but it still fell short in the eyes of the government, which subsequently pushed for a billion-dollar commitment for manufacturing within Indonesia. Reports from last month indicated that Apple agreed to this steep request, with plans to focus on large-scale production of AirTags.
Government Dismisses the Billion-Dollar Offer
Despite reaching an agreement on the investment amount, Reuters has reported that the government remains steadfast in its decision not to lift the ban on the iPhone 16, citing an unusual rationale.
According to Minister Agus Gumiwang Kartasasmita, while Apple has established a facility for producing its AirTag tracking device on Batam island—located near Singapore—this does not qualify as local production of iPhone components.
“We cannot issue a local content certification that would enable Apple to sell the iPhone 16 because this facility is not directly related to the production of the smartphone,” he stated, emphasizing that only phone components would be considered.
Insights from 9to5Mac
It comes as no surprise that Indonesia is demanding a substantial investment from Apple. As the world’s fourth most populated country, trailing only China, India, and the USA, Indonesia has witnessed India successfully negotiating significant manufacturing commitments from Apple. It believes it deserves a substantial investment in exchange for access to its market of approximately 284 million people.
However, one might question the importance of the product being made domestically. A billion-dollar investment in AirTag manufacturing would bring the same economic impact as a similar investment for iPhone parts. I suspect Indonesia is playing a strategic game to first secure a commitment for the AirTag facility and then leverage that into a more advantageous deal for iPhone production down the line.
In the end, Indonesia is likely to benefit, possibly securing another billion-dollar investment from Apple. With a vast number of potential iPhone 16 customers awaiting, it’s anticipated that Apple will certainly sweeten the deal even further.
