A Little More Effort Needed?
At the onset, Indonesia had requested Apple to make a modest investment of 109 million dollars, aimed at funding a developer academy, along with an additional 10 million dollars to support local manufacturing. One might wonder, how did we reach this deadlock?
The issue is that Apple did not fully honor this initial request. Consequently, the government hardened its stance, banning the sale of the iPhone 16 in its territory and demanding a significantly larger investment. A snowball effect and bidding war ensued: Apple initially proposed 100 million dollars, a bid that was quickly rejected.
Facing a deadlock, the California-based company eventually agreed to spend one billion dollars to develop a production chain in the country, specifically to manufacture its AirTags. However, this proposal, despite meeting the demanded amount, was also turned down.
New Requirements
Now, the Indonesian government demands that the one billion dollar investment be directly connected to the production of iPhone components, not other Apple products like AirTags. Minister Agus Gumiwang Kartasasmita explained that the project on Batam Island, near Singapore, does not meet the necessary criteria to receive the required certifications. These certifications are crucial for allowing the sale of Apple products in the country. There is no basis for the ministry to issue a local content certification. (The AirTag factory installation) has no direct relation to iPhone components
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Clearly, Indonesia has recognized its strong position, in a global trend where populous countries seek significant economic benefits in exchange for access to their markets. Similarly, Apple had to establish large-scale production facilities in India before it could obtain permission to open its own Apple Stores.
By banning the iPhone 16, Indonesia hopes to secure a share of the global iPhone component production, thereby strengthening its local industry. With a population of over 270 million people, the country represents a significant market for Apple, but the tense negotiations show that Jakarta is not willing to back down easily.
Apple finds itself in a deadlock: maintaining its stance against Indonesian demands might limit its opportunities in one of Asia’s largest markets, but yielding could set a precedent for other countries seeking similar terms.