Apple's Challenging Investment Plans in Indonesia - iPhone 16 Ban & AirTag Factory
On 7 January 2025, a delegation of US multinational technology company Apple Inc. visited Indonesia to discuss the company's investment plans in Southeast Asia's largest economy. This is assumed to involve two matters: the recent iPhone 16 sales ban in Indonesia, and the construction of a USD $1 billion AirTag factory in Batam (near Singapore).
The Apple delegacy was led by the company's Vice President of Global Government Affairs Nick Ammann. First, they visited Indonesia's Industry Ministry where they met Industry Minister Agus Gumiwang Kartasasmita. Next, the Apple delegacy went to visit the Investment Ministry (BKPM) where they met Investment Minister Rosan Roeslani.
The meeting at the Industry Ministry was reportedly tougher than the meeting at the Investment Ministry.
iPhone 16 Sales Ban in Indonesia
At the Industry Ministry it is assumed that discussions involved the recent ban on sales of Apple's latest iPhone 16 in Indonesia. The US company is only allowed to sell its iPhone 16 in Indonesia if at least 35 percent of the smartphones' components are sourced domestically (which is not the case currently). Moreover, the bar is expected to be raised from 35 percent to 40 percent for smartphones, computers and tablets at some time in the future. However, the timing of the higher bar is unknown.
Reportedly, one day earlier (on 6 January 2025), Apple sent the Industry Ministry an investment proposal to raise the portion of locally sourced parts in the iPhone. However, the Industry Minister stated that it will require time before any proposal is being accepted as the ministry wants Apple to meet four “fairness principles”, which involve:
(1) to what extent is the investment in Indonesia in line with investments done by Apple in other countries in the Asian region (such as in Vietnam and India),
(2) how much is Apple's investment in Indonesia compared to that done by its competitors, such as Samsung, Xiaomi and Huawei, in Indonesia?
(3) to what extent will the investment by Apple bring added value to Indonesian society.
(4) to what extent will the investment create new jobs.
In Indonesian media Setia Diarta, Director General for Metal, Machinery, Transportation Equipment and Electronic Industries at the Industry Ministry, said there are various investment models possible for Apple, for example by opening an Apple Academy in Indonesia where Indonesians can be trained.
Negotiations between the government and Apple are expected to continue in the foreseeable future before any decisions are taken or an agreement is reached between both sides.
AirTag Manufacturing Factory in Batam
The AirTag, which has been on the market since early 2021, is a tracking device developed by Apple Inc. that is designed to act as a key finder. As such, it helps people to find personal objects, such as keys, bags, apparel, small electronic devices and vehicles.
Indonesian Investment Minister Rosan Roeslani said his side and Apple agreed on a USD $1 billion investment plan in an AirTag manufacturing plant on Batam. This would only involve the first phase of the whole project. Reportedly, this factory is planned to produce 65 percent of all of Apple's AirTags that come on the international market.
It is hoped that construction of the factory can be completed by Q1-2026 so that production can start that same quarter.
Meanwhile, based on its 2020-2023 investment commitments in Indonesia, Apple still needs to invest a sum of USD $10 million.
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