Apple is known for its tough negotiating stance, but it appears the Indonesian government is willing to give it all it can get.
The country has banned sales of the iPhone 16, saying the Cupertino company has not invested enough in the local economy. Apple has responded by offering to increase its production costs from $10 million to $100 million, but Indonesia now says it expects $1 billion — and wants the investment agreed upon within a week…
iPhone 16 Sales Ban
Apple initially invested in Indonesia by putting $109 million into a developer academy there and then spending another $10 million on manufacturing. The government said Apple failed to deliver on its first promise, spending only $95 million. As a result, it banned the sale and use of the iPhone 16 models.
Apple's $14 million (Rp 230 billion) shortfall prevented Indonesia's Industry Ministry from issuing the proper IMEI (International Mobile Equipment Identity) certificates required to sell the devices in the country.
Apple Upped Manufacturing Spend to $100 Million
Apple responded by offering to increase its manufacturing spending in the country tenfold, from $10 million to $100 million.
It is not yet clear what form this investment will take. This could include asking Foxconn to set up iPhone and iPad assembly plants in the country, or having other supply chain partners manufacture components for Apple devices, [though] the government has previously indicated the latter approach would be acceptable.
The government has said it expected more, although it did not give a precise figure at the time.
But now Indonesia wants $1 billion
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But Reuters reports today that the country is expecting another tenfold increase, to $1 billion.
Indonesia expects to receive a $1 billion investment commitment from tech company Apple within a week, its investment minister said on Tuesday, after the government banned sales of the iPhone 16 for not complying with local content rules […]
“Whoever benefits from sales should invest here, create jobs here. “What’s important is how the global value chain moves here, because once that happens, suppliers will follow,” Rozan said, adding that the investment commitment is part of the first phase.
Indonesia is in a relatively strong position, with a total population of about 280 million people and growing wealth, making it an important growth market for Apple. The report also did not provide a time frame, so Apple would likely be able to satisfy the government with a commitment spanning a decade or two.
Apple had not commented at the time of writing.
Photo by Ivy Aralia Nizar on Unsplash
