Apple has a reputation for conducting tough negotiations, but the Indonesian government has proven that it can stand its ground.
The Indonesian government prohibited the sale of the iPhone 16, citing Apple’s insufficient investment in the local economy. In reaction, Apple proposed to raise its manufacturing expenditure from $10M to $100M. However, Indonesia is now demanding $1 billion and expects this investment to be confirmed within a week.
The iPhone 16 Sales Ban
Initially, Apple committed to investing in Indonesia by allocating $109M for a developer academy and a further $10M for manufacturing. The government stated that Apple had not met its initial promise, having only spent $95M, which prompted the ban on iPhone 16 sales and usage.
Apple’s shortfall of $14 million ($230 billion rupiah) has prevented Indonesia’s Ministry of Industry from granting the necessary IMEI (International Mobile Equipment Identity) certifications, which are essential for the sale of devices in the country.
Apple Increased Manufacturing Investment to $100M
In response, Apple proposed a tenfold increase in its manufacturing expenditure in Indonesia, upping it from $10M to $100M.
The specific nature of this investment remains unclear. It may involve requesting Foxconn to set up iPhone and iPad assembly factories in the country or facilitating other suppliers to produce components for Apple products, although the government has indicated previously that this approach would be acceptable.
Now, Indonesia is Asking for $1B
However, as reported by Reuters, Indonesia is now seeking another tenfold increase, demanding a total of $1 billion.
According to the country’s investment minister, Indonesia expects a $1 billion investment commitment from Apple within a week following the ban on iPhone 16 sales due to non-compliance with local content regulations.
“Those who profit from sales need to invest here and create jobs. The critical aspect is relocating the global value chain here, as this will attract suppliers,” Rosan emphasized, noting that the investment commitment is part of an initial phase.
With a robust population of approximately 280 million and increasing prosperity, Indonesia represents a significant growth opportunity for Apple. The report did not mention a specific timeframe, suggesting that Apple could potentially meet the government’s expectations with a commitment that spans over the next decade or two.
As of this writing, Apple has not provided any comments.
Photo by Ivy Aralia Nizar on Unsplash
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