HOW APPLE CAPITALIZED INDONESIA FOR YEARS

Summary

Apple faces growing pressure from the Indonesian government after failing to meet investment promises and local content requirements. Despite earning billions in sales, Apple has avoided local production, opting instead to sell through other markets like Singapore. In response, the Indonesian government has banned the iPhone 16, highlighting the country's push for foreign companies to invest in local infrastructure. While Apple proposed a $100 million investment, many Indonesians feel this is insufficient, and competitors like Samsung have already made larger investments. Apple’s future in Indonesia hinges on whether it adapts to these demands or risks losing market access in a rapidly growing economy.

Takeaways

• 😀 Apple has been banned from selling the iPhone 16 in Indonesia due to failure to meet local investment commitments.
• 😀 Indonesia has been a key market for Apple, generating $2 billion in annual sales, but Apple has not made adequate investments in the country.
• 😀 Apple has not opened any official stores in Indonesia, which has led to frustrations among Indonesian consumers who lack local after-sales service.
• 😀 To sell in Indonesia, Apple needs to meet a 40% local content requirement (TKDN) or make equivalent investments in innovation development.
• 😀 Apple has invested in three Apple Developer Academies in Indonesia, but still has not met its full investment obligations from 2020 to 2023.
• 😀 The Indonesian government requires foreign companies like Apple to meet investment criteria to sell products in the country, and Apple has failed to fulfill these conditions.
• 😀 Indonesians largely support the government's decision, with many open to switching to other brands like Samsung or Xiaomi, driven by strong national pride.
• 😀 Apple’s request for a 50-year tax holiday in exchange for building a factory in Indonesia was rejected, and many Indonesians saw this as unfair.
• 😀 Vietnam has granted similar tax holidays to Apple, but Indonesia’s larger market size and stronger bargaining power make it more resistant to such demands.
• 😀 Apple’s failure to adapt to Indonesia's growing market and regulations may risk losing a significant market share in Southeast Asia.
• 😀 Indonesia's government is prioritizing investments that support local infrastructure, jobs, and factories, rather than just allowing foreign companies to profit without contributing to the economy.

Q & A

Why did Apple decide to increase its investment in Indonesia?

Apple increased its investment in Indonesia after the government banned the sale of the iPhone 16, recognizing the importance of Indonesia as a key market and to meet its investment obligations as per local regulations.

What is the Indonesian government's stance on Apple's market presence?

The Indonesian government has expressed dissatisfaction with Apple's failure to fully meet its investment commitments, especially considering the large sales revenue Apple generates in the country. The government wants Apple to contribute more to the local economy, such as by opening factories and creating jobs.

How does the Indonesian government regulate foreign companies like Apple?

The Indonesian government requires foreign companies to meet specific regulations like the TKDN (Domestic Component Level), which mandates that at least 35% of a product's components come from local materials. Alternatively, companies can meet these regulations by investing in innovation development.

Why did the Indonesian government ban the iPhone 16?

The Indonesian government banned the iPhone 16 because Apple failed to meet its promised investment commitments. Apple had not fulfilled its $17 million investment for 2020-2023, which led to the government withholding the necessary certification to sell the iPhone 16.

How does Apple’s treatment of the Indonesian market differ from its approach in other countries?

Apple's approach in Indonesia has been criticized for focusing solely on sales without making significant investments in local infrastructure. In contrast, Apple has made large-scale investments in countries like India and Vietnam, including building production facilities.

What are some of the challenges Indonesia faces when attracting foreign investment?

Indonesia faces challenges in attracting foreign investment, particularly due to its underdeveloped supply chain infrastructure for electronic components, which increases costs and presents logistical hurdles for companies like Apple.

What is the significance of the $100 million investment proposal from Apple?

The $100 million proposal is Apple’s attempt to satisfy the Indonesian government’s demands and secure approval to sell the iPhone 16. However, the government is comparing this amount to Apple's larger investments in other countries to assess its fairness.

How do Indonesians feel about Apple’s actions in the country?

Many Indonesians support the government’s actions, expressing frustration with Apple’s exploitation of the market. They feel that Apple should invest more in the country and contribute to the local economy, rather than just profiting from sales.

Why did Apple request a 50-year tax holiday from Indonesia, and how was it received?

Apple requested a 50-year tax holiday as a condition to build a factory in Indonesia. This request was seen as unreasonable by many Indonesians, who felt that it unfairly benefited Apple over local businesses that already pay taxes.

What potential impact does the Indonesian market have on Apple’s future?

The Indonesian market is crucial for Apple’s future due to its large and growing economy, with over 350 million active smartphone users. Failure to resolve the issues with the Indonesian government could risk losing market share, and other countries might follow Indonesia’s lead, which could affect Apple’s global operations.