Indonesia calls Apple’s $100 million investment offer unfair
Apple’s proposal to invest $100 million (about Rs. 842 crore) in Indonesia does not meet the principles of ‘fairness’, a top government official said, indicating Jakarta is seeking further negotiations before banning domestic sales of iPhone 16 is cancelled.
The amount falls short of what the US technology company has invested in other countries, Industry Minister Agus Gumiwang Kartasasmita told reporters on Monday.
Apple, for example, has funneled more than IDR 244 trillion ($15 billion or roughly Rs. 1,26,412 crore) into manufacturing facilities in Vietnam, where market sales total only roughly 1.5 million units, the official said. By comparison, Apple has only invested about R1.5 trillion in developer academies in Indonesia, where it sells about 2.5 million units.
The latest comments indicate Apple faces more hurdles as it tries to lift a ban on sales of its flagship iPhone 16 in Southeast Asia’s largest economy. Rival phone makers such as Samsung Electronics and Xiaomi have invested IDR 8 trillion and IDR 55 trillion respectively to produce their devices onshore, the minister added.
“We want Apple to return to do business here, but we need a fair solution,” Kartasasmita said.
The Indonesian government blocked sales of the iPhone 16 because Apple would not meet the domestic content requirement for smartphones and tablets.
The Cupertino, California-based company’s IDR 1.5 trillion investment in the country falls short of the IDR 1.7 trillion it committed in 2023 – a discrepancy of about $10 million “which is so small,” the minister Monday. In an effort to lift the sales ban, Apple has made a $100 million investment offer, Bloomberg News reported this month.
“We want Apple to send negotiating teams to meet with us,” Kartasasmita said.
One of the government’s requests is that the US tech giant should transfer the remaining $10 million (about Rs. 84 crore) of its investment pledge from last year and come up with a better offer for 2024-2026. The minister added that the top priority is still for the company to open a factory in Indonesia.
The bans are the latest example of Indonesia playing hardball as new President Prabowo Subianto tries to pressure international companies to boost local production, which would be a boon for the domestic industry. The country has also seen sales of Alphabet Inc.’s Google Pixel phones. banned due to a similar lack of investment.
Last year, Indonesia announced regulations that forced ByteDance’s TikTok to spin off its shopping function from the popular video scrolling service, an effort to protect its retail sector from cheap Chinese-made goods.
Although Apple is outside the top six smartphone brands in Indonesia, the country is a potential growth market with a young, increasingly tech-savvy population. The $1 trillion (roughly Rs. 84,27,567 crore) economy has more than 350 million active mobile phones, which is more than the country’s 270 million population, according to government data.
“We expect this Apple issue to be resolved quickly as they are also very interested in doing business here,” Kartasasmita said.
© 2024 BloombergLP
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
