Apple Inc. is proposing a nearly $10 million investment to establish additional manufacturing capabilities in Indonesia, aiming to lift the ban on its latest iPhone sales. Sources familiar with the matter have indicated that the investment will be directed toward a new factory in Bandung, southeast of Jakarta, in collaboration with existing suppliers. This facility would focus on producing accessories and components for Apple devices.
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The proposal has been submitted to Indonesia’s Ministry of Industry, which recently blocked permits for the sale of the iPhone 16 due to Apple’s local subsidiary failing to meet a 40% domestic content requirement for smartphones. The ministry is currently reviewing Apple’s proposal, which is not yet final and may still undergo changes.
This iPhone ban highlights the increasing pressure from Indonesia’s new President Prabowo Subianto to bolster local manufacturing and protect domestic industries. Similar restrictions were imposed on Google Pixel phones for not meeting investment criteria. These actions are a continuation of policies from the previous administration, which saw Indonesia block ByteDance to protect its retail market, resulting in a significant investment from the company in local e-commerce.
Apple currently does not operate any standalone factories in Indonesia; instead, it partners with local suppliers for component manufacturing. An investment of nearly $10 million is a small price for Apple to potentially access Indonesia’s large consumer market of approximately 278 million people, over half of whom are tech-savvy and under 44 years old.
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While Indonesia may view this potential investment as a success, its aggressive tactics may discourage other international companies from establishing operations. Despite calls for increased manufacturing, Indonesia’s local industry has struggled, with manufacturing’s share of GDP declining significantly from 21.1% in 2014 to 18.7% last year.
