In a significant move to regain access to the Indonesian market, Apple has proposed an investment of nearly $10 million to establish a manufacturing facility in Bandung according to news agency Bloomberg. This initiative comes as the tech giant seeks to have the recent ban on the sale of its latest iPhone lifted, according to sources familiar with the matter.
Investment plans and local partnerships
The proposed factory would collaborate with Apple's existing suppliers to produce a variety of accessories and components for its devices. While details remain under wraps, the investment plan has been submitted to Indonesia’s Ministry of Industry, which recently blocked a permit for the iPhone 16, citing Apple’s failure to meet a 40% local content requirement for smartphones and tablets.
The ministry is currently deliberating the proposal, which is not yet finalized and could be subject to adjustments. Apple has not responded to requests for comments, nor has the Ministry of Industry.
Government pressure and economic goals
Indonesia's ban on the iPhone 16 highlights the increasing pressure from President Prabowo Subianto’s administration on foreign companies to enhance local manufacturing. This initiative aims to safeguard domestic industries and is part of a broader strategy that also saw the government prohibiting sales of Google Pixel phones for similar reasons.
Such moves reflect ongoing policies from the previous administration, which attempted to protect local businesses from international competition. For instance, last year, Indonesia took action against ByteDance (TikTok), prompting the company to invest US$ 1.5 billion in a partnership with Tokopedia, an Indonesian e-commerce platform.
The risks of strong-arm tactics
While the Indonesian government may view Apple's potential investment as a victory, this strong-arm approach could deter other international firms from expanding their operations in the country. Companies looking to move away from reliance on Chinese manufacturing might hesitate to invest in Indonesia, given the risks associated with its unpredictable trade policies.
Apple’s current investments in Indonesia, totaling approximately US$ 96.2 million, fall short of its pledged US$ 110 million commitment. The government has also urged local e-commerce platforms, including Tokopedia and TikTok, to remove sellers of the Apple iPhone 16, threatening legal action against non-compliance.
Broader manufacturing concerns
Despite ongoing calls for increased foreign investment in manufacturing, Indonesia's local industry continues to struggle. The manufacturing sector’s contribution to the country's GDP has decreased from 21.1% in 2014 to just 18.7% last year.
Recent import restrictions on a variety of products, including MacBooks and chemicals, aimed at compelling foreign companies to boost local production, have sparked discontent among the business community. Companies like LG Electronics Inc. have voiced concerns over the challenges posed by these policies, which hinder their ability to import essential components for manufacturing.
Conclusion
In conclusion, Apple’s investment proposal in Indonesia signifies its intent to penetrate a crucial market, but the country's approach to international business could complicate its efforts and affect its economic aspirations.
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