Apple and the bigger fight over Indonesia's billion-dollar mobile market

The real question: Will tech giants move factories here if the country withholds access to its consumer market?

- Arlina Arshad

JAKARTA — What has Indonesia's tussle with Apple over the iPhone 16 really achieved?

In October 2024, Indonesia banned the iPhone 16 series after Apple failed to comply with the country's Domestic Component Level, or TKDN, regulation, which required smartphones and tablets sold in Indonesia to contain 40 per cent locally made components. Google's Pixel phones faced the same restriction days later.

The ban was clearly a tactic by South-east Asia's largest economy to push multinational firms to invest in local production, transfer technology, and create high-quality jobs. Companies could meet these requirements by manufacturing locally, developing software, or establishing research and development centres in the country.

The prize for doing all this? A giant market of young consumers in a growing economy.

Indonesia, one of the world's largest mobile phone markets, had over 352 million cellular subscribers in 2023, according to the Central Statistics Agency. With a population of 280 million, a quarter own more than one device.

Apple took the bait. It initially offered a US$100 million (S$134 million) investment to build an accessories and components plant in Bandung, West Java, but the proposal was rejected. Industry Minister Agus Gumiwang Kartasasmita called the offer "unfair", as he pointed to Apple's significantly larger investments in Vietnam and Thailand.

The company had reportedly invested 400 trillion Vietnamese dong (S$21 billion) in Vietnam and over US$24 billion in Thailand, leveraging their well-established electronics ecosystems, particularly suited for Apple Watch and MacBook production. Surely they could do better in Indonesia?

Mr Agus also said that, unlike Samsung and Oppo, which had factories in Indonesia, Apple had yet to establish a manufacturing presence.