Indonesia Rejects Apple’s $1 Billion Offer to Lift iPhone 16 Ban: Local Content Rules Remain a Sticking Point

Indonesia is holding firm on its ban of Apple’s iPhone 16, rejecting the tech giant’s $1 billion proposal to invest in local manufacturing as insufficient to meet the country’s stringent local content requirements. This decision highlights the ongoing tension between Indonesia’s industrial policy and global tech companies seeking access to its lucrative market.

The Ban and Its Roots

President Prabowo Subianto’s government banned the sale of the iPhone 16 in October, citing Apple’s failure to comply with a regulation requiring 40% of the content in smartphones and tablets to be sourced locally. Google’s Pixel phones were also banned for not meeting this requirement, underscoring Indonesia’s commitment to enforcing these rules.

Apple had proposed building a $1 billion AirTag manufacturing plant in partnership with a local entity. However, officials clarified that this investment would not count toward the local content requirement for smartphones. “As of this afternoon, the Ministry of Industry does not have the basis to issue the local content certificate for Apple products, especially the iPhone 16,” Agus Gumiwang Kartasasmita, Indonesia’s industry minister, stated on Wednesday. He added, “Apple’s investment proposal is not enough.”

Apple’s Evolving Proposals

Apple’s $1 billion AirTag facility, announced by investment minister Rosan Roeslani, is slated for completion in early 2026. This marks a significant increase from Apple’s earlier offers of $10 million and later $100 million, which were deemed insufficient. Officials argue these investments pale in comparison to Apple’s revenue in Indonesia and fail to align with the country’s manufacturing goals.

The American Chamber of Commerce in Indonesia has criticized the local content rules as overly restrictive, noting that it is “very challenging” for foreign companies to meet thresholds in industries like electronics, where domestically made components are often unavailable.

Indonesia’s Strategic Position

Indonesia, the world’s fourth-most populous nation, is leveraging its massive consumer base to attract foreign investment and strengthen its domestic manufacturing sector. With 354 million active mobile phones in a population of 280 million, the country presents a lucrative market for tech companies.

Despite the opportunity, Indonesia’s protectionist policies, including local content requirements, have deterred some investors. Businesses warn that bans on products like Apple’s iPhone 16 and Google’s Pixel phones could harm Indonesia’s appeal as an investment destination, especially compared to regional competitors like Vietnam and Malaysia, which have more business-friendly regulations.

Critics and Challenges

Critics argue that while the rules aim to bolster domestic industries, they risk stifling consumer choice and innovation. Economists and businesses warn that overly rigid policies could discourage foreign investment and push companies to favor neighboring countries with more flexible trade regulations.

Apple, which has four developer academies in Indonesia but no manufacturing facilities, has faced repeated calls for deeper investments in the country. Apple executives are currently in Jakarta to negotiate with government officials and explore potential resolutions.

Looking Ahead

The standoff between Indonesia and Apple underscores the challenges of balancing local industrial policy with global business demands. Indonesia’s push for higher local content aligns with its long-term goals of reducing reliance on imports and fostering domestic innovation. However, the current impasse could drive foreign companies to reassess their Southeast Asian strategies.

Apple has yet to comment publicly on the matter, but the outcome of ongoing negotiations could shape its future in one of the region’s most promising markets. For now, Indonesia remains steadfast in its demands, prioritizing its vision of economic sovereignty over immediate access to global tech products.

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Eric Sandler

Chief Writer at WiFi Planet

Eric Sandler is a veteran US tech writer with over 25 years of experience covering the latest advancements in the world of technology. From groundbreaking innovations to in-depth reviews, Eric has built a reputation for delivering insightful, reliable content. His work spans across a variety of tech topics, including smartphones, gadgets, AI, and more, making him a trusted voice in the industry.