Hopes for lifting Indonesia’s ban on iPhone 16 sales were dashed this week after a last-minute about-face from a key government minister, leaving Apple’s negotiating team frustrated and empty-handed, Bloomberg reports.
Nick Amman, Apple’s vice president of global affairs, departed Jakarta on Wednesday after failing to secure an agreement, despite what appeared to be a green light from Indonesian President Prabowo Subianto.
The impasse centers around Indonesia’s demand that Apple comply with domestic manufacturing requirements for smartphones and tablets. The ban, imposed in October, effectively blocked sales of Apple’s flagship iPhone 16 in the country. Apple had offered a $1 billion investment package, including setting up an AirTag production plant in Batam and funding local tech academies. This proposal, reportedly approved by President Prabowo last month, was intended to address Indonesia’s local content requirements.
However, according to sources familiar with the negotiations, Minister for Industry Agus Gumiwang Kartasasmita blocked the deal this week, telling the Apple delegation that the company must manufacture part of the iPhone or its components within Indonesia to lift the ban. This requirement, seemingly at odds with President Prabowo’s earlier approval, has thrown the deal into uncertainty.
The sources, who requested anonymity due to the sensitivity of the matter, suggest this situation reflects power dynamics within Indonesia’s newly formed government, underscoring the challenges global corporations face when operating in developing economies with increasingly nationalistic policies.
Sources indicated that President Prabowo was initially receptive to Apple’s expanded proposal, which included a plant in Bandung to manufacture other accessories. He reportedly directed his Coordinating Minister for Economic Affairs, Airlangga Hartarto, to finalize the agreement. However, Minister Kartasasmita intervened, insisting on the local manufacturing component before removing the sales ban. Negotiations are now being handled by Minister Kartasasmita’s technical team, led by Setia Darta, the ministry’s director-general for metal, machinery, transportation equipment and electronics industry.
Kartasasmita was also responsible for controversial import rules implemented last year that restricted imports of numerous products, including Macbooks and car tires, which angered both domestic and international businesses.
Despite the setback, not all of Apple’s team has left Indonesia. Other members remain in Jakarta to continue negotiations.
The situation highlights Indonesia’s efforts to pressure international companies into establishing local manufacturing, which the government hopes will create jobs and boost its domestic industries. However, critics argue that these strong-arm tactics risk deterring other firms from investing in Indonesia, especially those aiming to diversify away from China.
Indonesia, with a population of 278 million, is a significant potential market for Apple. More than half of the population is under 44 and is technologically adept.
