Indonesia Bans iPhone 16 Sales Over Unmet Local Investment Requirements

Indonesia has blocked Apple Inc. from selling its latest iPhones in Southeast Asia’s largest economy, citing unmet local investment requirements. The Ministry of Industry announced on October 25 that the iPhone 16, launched in September, cannot be marketed domestically because PT Apple Indonesia has not met the country’s 40% domestic content requirements for smartphones and tablets. However, Apple’s older products are still allowed for sale in Indonesia.

This poses a challenge for Apple, which has seen strong initial sales of the iPhone 16 in other Asian markets such as China. While Apple is not among the top six smartphone brands in Indonesia, the country represents a significant growth opportunity with its young, tech-savvy population. The $1 trillion economy boasts over 350 million active mobile phones, far exceeding its population of 270 million, according to government data.

Earlier in October, the Ministry of Industry disclosed that Apple has invested only 1.5 trillion rupiah ($95 million) in Indonesia, falling short of its commitment of 1.7 trillion rupiah. Instead of establishing a local manufacturing facility, Apple has built four developer academies in the country. In April, CEO Tim Cook mentioned the company was assessing the feasibility of setting up such a facility.

Apple representatives have not responded to requests for comment made outside of regular US business hours. In contrast, competitors like Samsung Electronics Co. and Xiaomi Corp. have established factories in Indonesia to comply with the domestic content regulations introduced in 2017. These regulations also allow companies to boost local content by sourcing materials or hiring workers domestically.

Indonesia has a history of using trade restrictions to encourage foreign companies to produce goods locally, with mixed success. Recently, the government tightened import rules on a wide range of products, leading to shortages of items such as laptops and car tires and causing congestion at ports. However, its long-standing ban on exporting mineral ores like nickel has spurred rapid growth in its battery sector.

The Ministry of Industry noted that approximately 9,000 iPhone 16 units have entered Indonesia, either hand-carried by passengers and crew or delivered by post. These units are only permitted for personal use and cannot be traded. Moreover, since 2020, Indonesia has required all phones purchased overseas to be registered with the government, subjecting them to a hefty tax.