The regulation on mandatory local content requirement for mobile phone products (Regulation No. 27/2015 dated July 3, 2015 of the Ministry of Information and Communications of Indonesia) took effect from January 1, 2017. According to this regulation, to be legally distributed in the Indonesian market, smartphones and tablets must use at least 30% of components/components manufactured in Indonesia, while smart devices using 4G and LTE networks must use at least 40% of domestic components.

According to the regulation, there are three options for a company to meet the mandatory localization ratio in Indonesia, including a device manufacturing plan, an application creation plan, or a domestic innovation development plan.

Since its implementation, this regulation has also caused many businesses to face difficulties in exporting phones to the Indonesian market. Specifically, in late October and early November 2024, Indonesia has successively banned Apple from selling iPhone 16 phones and Google from selling Google Pixel phones due to failing to meet the TKDN conditions on localization rates.

Photo: Iphone 16 banned from sale in Indonesian market

In order to lift this ban, Apple has proposed to increase its investment in Indonesia to 1 billion USD to meet localization requirements and lift the ban on selling iPhone 16. Previously, Apple had proposed to invest an additional 10 million USD, then increased to 100 million USD to fund technology training academies and build production facilities for AirPods Max components. However, these proposals were all rejected on the grounds that they did not meet the "principle of fairness" required by the Indonesian Ministry of Industry.

During a meeting with lawmakers on Tuesday, Roeslani revealed that the Indonesian government is expected to receive an official investment proposal from Apple later this week. “We have been in discussions and Apple is currently in the early stages of issuing an official statement on the investment,” he said.

Investment Minister Roeslani stressed that Apple has benefited from Indonesia’s large consumer market but has focused its investments on neighboring countries such as Vietnam.

According to Apple’s 2023 supplier list, Indonesia currently has only one Apple-related supplier, while Malaysia has 19, Thailand 24 and Vietnam 35. Roeslani said that Apple’s move of part of its global value chain to Indonesia could have a ripple effect, prompting other suppliers to relocate to the country.