The Indonesian market has thrown a curveball at Apple as the tech giant grapples with regulatory hurdles tied to investment obligations. Following the indefinite ban on the iPhone 16 and Apple Watch 10 series, Apple’s attempts to remedy the situation with increased financial commitments have yet to win the favor of Indonesia’s government.
Apple’s troubles began when Indonesia enforced its Domestic Component Level (TKDN) certification, which requires foreign firms to achieve a 40% local content level. The options include manufacturing locally, developing software, or establishing R&D centers. While Apple had pledged an ambitious IDR 1.71 trillion ($109 million) investment in local R&D facilities, the tech giant has delivered only IDR 1.48 trillion ($95 million) so far.
To address the shortfall, Apple promised an additional $10 million, followed by another boost of $100 million, theoretically meeting the initial commitment. Yet, Indonesia’s Industry Ministry has deemed these efforts inadequate. Minister Agus Gumiwang Kartasasmita’s internal discussions with Apple highlighted the government’s desire for a more substantial financial contribution.
According to ministry spokesperson Febri Hendri Antoni Arif, the local government envisions more than meeting financial benchmarks. “From the government’s perspective, of course, we want this investment to be larger. A larger investment would facilitate the development of Indonesia’s domestic manufacturing sector, helping the country become a part of Apple’s global supply chain,” Arif stated.
The push for deeper integration into Apple’s supply chain signals Indonesia’s ambition to elevate its technological ecosystem. Expanding local production of accessories and components could help bridge the gap, aligning with the government’s broader goals.
The failure to meet regulatory requirements has led to an indefinite ban on two of Apple’s marquee product lines: the iPhone 16 series and the Apple Watch 10. This impasse could not only harm Apple’s market presence in Indonesia but also set a precedent for how other emerging markets approach global tech giants.