Apple Caves to Indonesia, Announces $100 Million Investment Proposal for New Plant

Tech giant Apple has made a $100 million investment proposal to Indonesia to build a plant to manufacture accessories and components, the industry ministry said on Wednesday.

The proposal comes after Indonesia banned sales of Apple's iPhone 16 over the firm's failure to meet local rules on components. Indonesia requires certain smartphones sold domestically to comprise at least 40 per cent locally-made parts. The government of the island nation also held the TKDN certification for the iPhone 16.

“We, the Ministry of Industry, are yet to be able to issue permits for the iPhone 16 because there are still commitments that Apple must realise,” said Kartasasmita. He had told local media that the extension of the TKDN (equivalent to India’s BSI certificate) certification is “still pending, awaiting further investment realisation from Apple.”

Due to the ban, the use of iPhone 16 units imported from overseas markets was termed illegal, along with consequences for their owners, the government had said in October.

The trade ministry will meet on Thursday to discuss Apple's proposed West Java plant, its spokesperson Febri Hendri Antoni Arif said in a statement. "By holding a meeting on Thursday, this means that the industry minister welcomes Apple's investment commitment," he said.

Apple has no manufacturing facilities in Indonesia, but has since 2018 set up application developer academies with a combined cost of 1.6 trillion Indonesian rupiah ($99 million).

Apple did not immediately respond to a request for confirmation.

Indonesia has also banned sales of smartphones made by Alphabet's for a similar reason. According to the government, the company has not met the rules which necessitate certain smartphones sold domestically to contain at least 40 per cent of parts manufactured locally.

Google and Apple are not among the top smartphone makers in Indonesia. The top two smartphone makers in the first quarter of 2024 were Chinese firm Oppo and South Korean firm Samsung, research firm IDC said in May.

Indonesia has a huge, tech-savvy population, making the Southeast Asian nation a key target market for tech-related investment.

Written with inputs