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| Apple's Insufficient Investment Keeps iPhone 16 From Indonesian Shelves |
Indonesians eagerly awaiting the iPhone 16 release will have to wait a bit longer. The latest Apple flagship device is noticeably absent from store shelves across the island nation. Why? Because Apple has yet to meet all of Indonesia's stiff foreign investment requirements.
The Indonesian government requires tech companies to make substantial in-country investments as a prerequisite for selling their products locally. This includes meeting domestic component targets and establishing manufacturing facilities inside Indonesia's borders. For now, Apple falls short.
Indonesia's TKDN Certification - A Steep Barrier to Entry
Indonesia's domestic component requirements are known as TKDN certification. For smartphones like the iPhone 16, companies must source at least 35% of device components locally.
As of October 12th, the iPhone 16 was still missing from Indonesia's TKDN website. Without this mandatory certification, Apple cannot legally sell its newest phone in Indonesia.
"The iPhone 16 still cannot enter the Indonesian market because Apple is in the process of getting a TKDN certificate, one of the terms of importing cellphones," said Indonesia's Minister of Industry Agus Gumiwang Kartasasmita on October 8th. He indicated Apple previously held a now-expired license. Indonesia aims to compel a license renewal by pushing for greater investment.
Local reports suggest Apple pledged to invest 1.71 trillion IDR ($110 million USD) but has so far only invested 1.48 trillion IDR ($95 million USD). This leaves a gap of 240 billion IDR ($15.4 million USD) to fulfill its commitment.
"After they comply, we will issue a license to sell the iPhone 16. It's all based on fairness for investors who have made big commitments to Indonesia," Minister Agus told CNBC Indonesia. He characterized the remaining investment as "relatively small" given Apple's potential to profit from Indonesia's massive 300 million strong market.
User Reactions Split - "Comply With Regulations" vs "Red Tape"
Indonesia's demands have sparked divided reactions locally according to Channelnewsasia. Some citizens insist Apple and other companies comply with all regulations to operate in Indonesia. Others see complex rules as red tape denying users access to cutting-edge tech, forcing them to buy iPhones from Singapore and Malaysia instead.
The report notes iPhone 16 models average $1000 USD in Singapore. But Indonesians are paying an extra $155 premium to purchase "grey market" handsets from abroad.
One user commented, "Apple should just comply with the rules if they want to sell here. Other companies have set up factories without complaint." But another Indonesian lamented, "These difficult policies just make it harder for us to get the latest technology. The government shouldn't get in the way."
Apple Seeks Vietnam-Style Incentives
To satisfy TKDN requirements, companies can pursue domestic manufacturing, develop in-country apps, or spearhead local innovation programs. Apple chose the third option by establishing developer academies.
However, Minister Agus asserts "Apple should not just establish an academy" but construct full-scale factories or research centers. This would bump their TKDN to 40% and expedite market entry. Unlike Apple, Samsung and Chinese firms like Xiaomi, Oppo, and Vivo already manufacture devices in Indonesia.
In an interview with CNBC Indonesia, Indonesia's Minister of Communications Budi Arie Setiadi revealed Apple requested Vietnam-style incentives. This included tax breaks in exchange for providing hundreds of thousands of jobs.
Minister Budi deemed these expectations "too big" and cautioned they could trigger similar demands from other companies. "That can't happen," Budi stated.
In an October 11th statement to the publication, Apple affirmed its "significant investment" and "strong commitment to develop" Indonesia. The company expressed eagerness "to make our latest products, including iPhone 16, available to customers as soon as possible."
During CEO Tim Cook's April visit, Apple opened its fourth Indonesian academy in Bali while "considering establishing manufacturing." In Vietnam, Cook committed to sourcing more locally-made components and driving innovation without direct manufacturing.
Good Faith Negotiations or Stonewalling?
Indonesia's TKDN rules undoubtedly aim to spur economic growth, a noble goal. However, the regulations also introduce complexity that delays consumers' access to desired products.
Minister Agus emphasizes Apple investing in full-scale manufacturing versus simply training developers. From his perspective, Apple seeks special treatment afforded to companies providing mass employment.
Meanwhile, Apple cites considerable existing Indonesian investments, including plans to potentially manufacture devices locally.
With both sides expressing good faith efforts, a compromise seems feasible. But the impasse continues. Indonesia wants concrete commitments, while Apple resists overextending itself prematurely.
Hope remains that an agreement will be reached soon. Apple can then shift focus from tense negotiations to bringing Indonesians their beloved iPhones. Because at the end of the day, companies and governments share a common interest - serving people eager to purchase quality products at reasonable prices.