February 27, 2025
JAKARTA – The government has agreed to lift a sales ban on Apple’s iPhone 16 after months-long negotiations over compliance with local content rules.
The iPhone 16 series was launched globally in October but has remained unavailable at Indonesian retailers until now, as the Industry Ministry said the devices failed to meet a 35 percent local content requirement.
Following the signing of a memorandum of understanding (MoU) with the United-States-based tech giant, Industry Minister Agus Gumiwang Kartasasmita announced on Wednesday that the issuance of local content certificates for Apple could proceed “immediately”.
“Today we have signed an MoU between the Industry Ministry and Apple. As I’ve said, since the beginning, we predicted the negotiation would not be easy,” he said during a press conference at the ministry’s offices.
Once the local content certificate is issued, Apple’s iPhone 16 still requires a distribution permit from the Communications and Digital Ministry. However, Agus noted that “there’s no reason for the ministry to halt the process [once Apple has] the local content certificate”.
The Industry Ministry has agreed to Apple’s innovation investment plans for the 2025-2028 period and to its investment commitments for 2023-2029.
Apple has opted for the innovation investment scheme as an alternative way to meet the local content rules.
The tech giant has committed itself to building research and development (R&D) facilities valued at US$160 million [Rp 2.6 trillion], including four Apple Developer Academies in South Tangerang in Banten, Surabaya in East Java, Batam in the Riau Islands and another in Bali.
Agus said Indonesia was the first country in Asia where Apple was building such R&D facilities.
The ministry estimated the multiplier effect of Apple’s innovation facilities at $72.3 as “intangible value from tangible costs”, which comprised technology transfer from Apple Academy valued at $47,3 million from 2023 to 2029 and the projected investment coming from 50 start-ups built by future Apple Academy graduates at $25 million.
Apple also agreed to additional investment for failing to comply in the previous agreement period based on Industry Ministry Regulation No. 29/2017 on local content calculation.
The additional investment is to be implemented through Chinese electronics manufacturer ICT Luxshare, which is to build a $150-million factory to produce Apple’s AirTag devices in Batam. The accessory plant is expected to supply 65 percent of the global market.
“There’s also a commitment to procure batteries needed for the AirTag products from local industries,” Agus added.
The minister reiterated that Apple had settled the $10 million investment commitment it still owed to obtain the domestic component certificate for 2020-2023, which it required to maintain sales of its iPhones in the country.
Moreover, Apple is set to establish one more production unit in Long Harmony, Bandung, West Java, to produce mesh fabric, one of the materials used for Apple’s AirPod Max production.
The ministry and Apple plan to devise an Apple manufacturing road map until 2029 to “strengthen Apple’s global value chain in Indonesia”.
The Industry Ministry previously noted a gap in Apple’s Rp 1.7 trillion ($108 million) investment commitment for developer academies after finding that the firm had only invested about Rp 1.5 trillion.
In November of last year, Apple proposed a $100 million investment, but the ministry rejected that as insufficient to meet the local content threshold. The government then pushed Apple to up the investment to $1 billion, resulting in the plan for the Batam AirTag facility.
However, after that project was announced, the sales ban remained in place as the company still failed to meet the local content requirements, according to the ministry.
National Economic Council (DEN) member Mari Elka Pangestu, who served as trade minister under former president Susilo Bambang Yudhoyono, has urged the government to take into account a possible US response to the iPhone sales ban under President Donald Trump.
Washington would not only focus on the trade deficit but also address nontariff barriers hindering investment and trade and could push Jakarta to ease or remove them, Mari said on Feb. 19.
Current investment hurdles like local content rules that “made it difficult for Apple to invest” had become a hot topic among US multinationals, Mari pointed out, urging the government to tread carefully.
In response to the revoked iPhone 16 sales ban, an Apple representative wrote to The Jakarta Post on Wednesday that the company was excited “to expand our investments across Indonesia” and noted that the tech giant was gearing up to launch its budget-friendly iPhone 16e globally on Feb. 28.
The tech giant has been expanding in emerging markets, with iPhone sales in Southeast Asia rising 15 percent in the second quarter last year, coinciding with Apple CEO Tim Cook’s tour of the region, including Jakarta.
The 16e model is designed to appeal to emerging markets such as ASEAN, helping to offset slowing demand in China and Japan, according to a report from Canalys, a Singapore-based tech market analyst firm.