Apple Inc. has been prohibited from selling its latest iPhones in Indonesia, the largest economy in Southeast Asia, due to not meeting local investment requirements.
The Ministry of Industry stated on Oct. 25 that the iPhone 16, released in September, cannot be sold in the country as PT Apple Indonesia, the local unit, has not met the 40% domestic content criteria for smartphones and tablets. However, older Apple products can still be marketed in Indonesia.
This development poses a challenge for Apple, despite its strong initial sales of the iPhone 16 in markets like China. While Apple ranks outside the top six smartphone brands in Indonesia, it sees the country as a potential growth market with a young, tech-savvy population and over 350 million active mobile phones, surpassing the population of 270 million, according to government data.
In October, the industry ministry reported that Apple has only invested 1.5 trillion rupiah ($95 million) in Indonesia, falling short of its commitment of 1.7 trillion rupiah. Apple chose to establish four developer academies in Indonesia instead of setting up a local manufacturing facility, although CEO Tim Cook expressed interest in exploring the feasibility of such a move in April.
Apple has yet to respond to inquiries outside regular US business hours.
In contrast, competitors like Samsung Electronics Co. and Xiaomi Corp. have established factories in Indonesia to comply with the domestic content regulations introduced in 2017, investing in the country’s economy in various ways.
Indonesia has a history of using trade restrictions to encourage foreign companies to increase local production, with varying levels of success.
The government imposed stricter import rules on a wide range of products this year, leading to shortages of items like laptops and car tires, as well as congestion at ports. However, longstanding bans on mineral ore exports, such as nickel, have driven growth in sectors like battery production.
About 9,000 iPhone 16 units have entered Indonesia through personal means since their release, but they are only allowed for personal use and cannot be sold. Indonesian regulations require overseas-purchased phones to be registered with the government and may be subject to substantial taxes.
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