There’s been a new development in the ongoing issue of how much local input must be included in smartphones sold to Indonesians. The Indonesian government is now reportedly planning to increase the local component requirement for such phones.
Much of this seems to be related to a disagreement with smartphone giant Apple. Indonesia last month banned sales of Apple's iPhone 16 after it failed to meet a requirement that smartphones sold domestically must comprise at least 40% locally made parts.
As we reported, Apple then offered to invest an additional US$100 million in Indonesia to convince the government to approve its new iPhone 16 to be sold in the country.
The government rejected this on the grounds it did not meet the principal of fairness. Among the issues was that the company had apparently still not put money into production facilities or factories in Indonesia.
The latest, widely reported, move, aimed at boosting the domestic manufacturing sector, still appears to be in its very earliest stages. According to Reuters, deputy industry minister Faisol Reza said the government was still discussing the details and gave no timeframe for the introduction of the plan, or by how much the ratio of local components would increase.
The government is apparently looking at whether investment into research and development is relevant and can be counted as a component in fulfilling the local content rule.
Apple has no manufacturing facilities in Indonesia but has since 2018 set up application developer academies. Reuters suggests that the government considers this to be the company's strategy to meet local content requirement for the sale of older iPhone models.
Can this issue be resolved? We may not have to wait long to find out. The minister has suggested that Apple and the government will meet soon to discuss a solution.
