Market
28
Oct
2024
3
min read

Apple faces ban on iPhone 16 sales in Indonesia due to missing investment promises

Apple has encountered a significant setback in Indonesia, as the country’s industry ministry announced that the tech giant will not be permitted to sell its Apple iPhone 16 smartphones. The decision stems from Apple’s failure to comply with Indonesia’s regulations mandating that smartphones sold within its borders contain at least 40% locally manufactured components. There have been several instances of bans on the sale of Apple iPhones in various countries. For example, a year ago, Apple faced restrictions in France when the iPhone 12 was prohibited due to concerns over excessive radiation levels. However, this current situation marks a first for the industry: we have never seen the sale of a smartphone halted due to issues related to the origin—or lack thereof—of its components.

Local investment promises not met

According to ministry spokesperson Febri Hendri Antoni Arief, the Apple iPhone 16 does not meet this local content requirement, which is crucial for operating in the Indonesian market. He stated, “Imported iPhone 16 hardware cannot be marketed in the country, because Apple Indonesia has not fulfilled its investment commitment to earn a local content certification.”

Broader ban on Apple products

Earlier this week, the Indonesian government expanded the ban to include not only the Apple iPhone 16 but also other newly released Apple products, such as the Apple Watch Series 10. This comprehensive prohibition affects both the sale and operation of the Apple iPhone 16, creating complications for tourists and expatriates in the region. Industry Minister Gumiwang Kartasasmita emphasized the seriousness of the situation, stating, “If there is an iPhone 16 that can operate in Indonesia, it means the device is illegal. Do report it to us.”

Investment commitments under scrutiny

The crux of the issue lies in Apple’s failure to meet its investment commitments in Indonesia. Apple had pledged to invest US$ 109 million USD to enhance the nation’s infrastructure and support local sourcing initiatives. However, the company has reportedly fallen short, contributing only about US$ 95 million USD This US$ 14 million shortfall has impeded the Ministry of Industry's ability to issue the necessary International Mobile Equipment Identity (IMEI) certifications for the Apple iPhone 16, which are required for legal sale in the country.

Minister Kartasasmita remarked, “We, the Ministry of Industry, are yet to be able to issue permits for the iPhone 16 because there are still commitments that Apple must fulfill.” The Indonesian government’s local content requirements are designed to ensure that foreign companies contribute to the local economy, with Apple also promising to establish research and development facilities, dubbed Apple Academies, in the country.

Conclusion

As Apple navigates this regulatory challenge, the future of its products in Indonesia hangs in the balance. The company’s ability to meet its local investment commitments will be pivotal in determining its operational success in one of Southeast Asia’s most dynamic markets.

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