IPhone Ban Works: Indonesia Entices Apple to Invest $1 Billion in Its Economy

For five months, official shipments of Apple’s iPhone 16 smartphones to Indonesia have been banned because the company ignored local government requirements for the level of localization of smartphones sold there. The grueling negotiations could end this week, when Apple announces its willingness to invest $1 billion in Indonesia.

Image Source: Apple

According to Bloomberg, signing an agreement with the Indonesian government will allow Apple to lift restrictions on imports of iPhone 16 smartphones into the country as quickly as possible. The company offered President Prabowo Subitano to invest $1 billion in the Indonesian market, but the investment program he approved last year was criticized by the cabinet, after which the terms of the agreement were repeatedly revised.

In addition to the $1 billion investment, Indonesian authorities expect Apple to help train local specialists, who should be able to independently develop competitive software and hardware. In addition to the existing Apple academies in Indonesia, the company’s educational programs will be implemented through other channels.

According to available information, Apple still has no plans to organize smartphone production in Indonesia. The company recently had to pay the country’s authorities $10 million in fines for the period from 2020 to 2023, which arose due to the company’s lack of intentions to bring its business model in Indonesia into compliance with local legislation during this period. Until now, the scale of Apple’s investments in the local economy was estimated at only $95 million.

For Apple, the Indonesian market is important even though its products are not among the top five most popular smartphone models in the country. With a population of 278 million, more than half of whom are under 44 and interested in new technology, Indonesia represents a significant market potential for Apple’s business in the region.

As originally planned, part of Apple’s billion-dollar investment will be used to build a facility in Batam to manufacture wireless AirTags. The facility will be operated by Luxshare Precision Industry, and the Indonesian plant will eventually account for every fifth Apple AirTag sold worldwide. Another facility will be built in Bandung, which will focus on manufacturing other Apple accessories. Part of the funds will be used to finance educational programs in Indonesia.