Apple Inc. has significantly increased its proposed investment in Indonesia, nearly tenfold, as the US technology giant attempts to overturn a government ban on the sale of its iPhone 16, according to sources familiar with the matter. The enhanced proposal would see Apple investing close to $100 million in the world’s fourth-most populous country over the next two years, marking a substantial escalation from its initial offer of $10 million.
The move underscores Apple’s determination to maintain access to Indonesia’s burgeoning consumer market, a critical piece of the tech giant’s global strategy. However, the path forward remains uncertain as the Indonesian government presses for further commitments centered on local development and domestic manufacturing.
Apple’s revised proposal, insiders report, involves ramping up its investment to focus on research and development (R&D) capabilities within Indonesia, potentially addressing the government’s demand for deeper integration of its operations with the local economy. The earlier $10 million plan included establishing a factory in Bandung to produce accessories and components, but this fell short of the government’s expectations for local content.
Despite this significant step, the Indonesian Ministry of Industry has yet to make a final decision on Apple’s latest proposal. Ministry officials, who declined to comment publicly, are reportedly pushing Apple to prioritize R&D investments as part of its larger commitment to the country.
Apple’s dealings with Indonesia’s Ministry of Industry have been far from smooth. After the company’s initial offer was rejected, senior executives from the Cupertino, California-based firm traveled to Jakarta to meet with Minister Agus Gumiwang Kartasasmita. However, in an unexpected turn of events, the executives were redirected to meet with the ministry’s director-general instead, as the minister was unavailable.
This misstep reflects the complex dynamics of foreign firms navigating Indonesia’s regulatory environment, which is increasingly assertive under President Prabowo Subianto’s administration.
The sales ban on Apple’s iPhone 16 stems from Indonesia’s requirement that smartphones and tablets meet a 40% domestic content threshold. According to the government, Apple’s investments to date—amounting to approximately 1.5 trillion rupiah ($95 million)—fall short of the 1.7 trillion rupiah commitment necessary to comply with this regulation.
Indonesia’s local content mandate applies to other tech companies as well. Alphabet Inc.’s Google Pixel phones have also faced restrictions for failing to meet the same investment thresholds. Such measures are part of the country’s broader push to bolster domestic industries and reduce reliance on imports, particularly in the technology and manufacturing sectors.
Indonesia’s hardline approach to multinational corporations is not without precedent. Under former President Joko Widodo’s administration, the government blocked TikTok’s operations to protect local retailers from cheap Chinese imports. This ultimately led ByteDance Ltd., TikTok’s parent company, to invest $1.5 billion in a joint venture with Tokopedia, part of the Indonesian tech conglomerate GoTo Group.
President Prabowo’s administration appears to be following a similar strategy, using its large and young consumer market as leverage. Indonesia’s population of 278 million, over half of whom are under the age of 44, represents a highly attractive target for global brands seeking tech-savvy customers. By compelling Apple to make a more substantial investment, the government aims to unlock economic benefits that go beyond mere consumer access.
While Indonesia’s tactics have succeeded in extracting commitments from companies like TikTok and, potentially, Apple, there are growing concerns that such an aggressive approach may deter other foreign firms. As multinational corporations increasingly look to diversify supply chains and decouple from China, Indonesia has positioned itself as a potential alternative hub. However, overly rigid demands for local content and unpredictable regulatory hurdles could undermine its appeal.
For Apple, Indonesia represents a critical market, but it’s not without risks. If negotiations falter, it could result in prolonged restrictions on the iPhone 16, jeopardizing Apple’s ability to tap into a fast-growing consumer base.
For Apple, securing access to Indonesia’s vast market is vital, particularly as the company contends with slowing smartphone growth in more mature economies. In recent years, the company has expanded its presence in the Asia-Pacific region, often partnering with local firms like Foxconn to assemble or supply components for its products. While it remains unclear which companies might benefit from Apple’s proposed investment, the tech giant’s typical strategy involves fostering partnerships with assembly and component suppliers that can scale operations to meet global demand.
For Indonesia, attracting high-profile investments like Apple’s is central to its economic vision. President Prabowo has ambitious plans to boost the country’s manufacturing base, create jobs, and fund critical policy initiatives. But striking the right balance—one that satisfies domestic goals without alienating foreign investors—will be a delicate act.
Apple’s next steps will likely involve intensifying negotiations with the Indonesian government to finalize the terms of its expanded investment. The stakes are high for both sides: Apple needs a swift resolution to maintain momentum for the iPhone 16, while Indonesia seeks to extract long-term value from the tech giant’s operations.
Whether Apple’s revised $100 million proposal will meet Indonesia’s demands remains to be seen. If successful, it could set a precedent for how multinational corporations engage with the country’s regulatory and investment landscape. Conversely, if talks stall, it may signal to other companies that doing business in Indonesia comes with substantial challenges, potentially affecting the nation’s broader economic aspirations.
