Restrictions on iPhone 16 & iPhone 16 Plus persist in Indonesia
The President of Indonesia has tentatively entered into a $1 billion agreement with Apple, contingent on approval, which aims to establish two manufacturing facilities responsible for producing up to 20% of global AirTag supplies.
According to insiders, Indonesian President Prabowo Subianto approved the deal following a briefing received over the weekend. Reports suggest that President Prabowo is also keen on attracting further investment from Apple in coming years.
The designated site for Apple’s AirTag production facility is Batam Island. The factory is anticipated to create around 1,000 jobs initially and will benefit from various tax incentives as well as import regulations favorable to Apple.
Bloomberg’s Thursday report on this agreement did not specify a timeline for reaching the projected production capacity nor when the ban on selling the iPhone 16 in Indonesia might be lifted.
The remaining funds from the $1 billion investment are earmarked for establishing an accessory plant in Bandung and creating educational initiatives affiliated with Apple.
Apple’s Tumultuous Journey in Indonesia
On October 11, Indonesian officials announced that Apple’s investments had fallen short of prior commitments. To date, Apple invested approximately 1.48 trillion rupiah ($94.53 million), which is lower than its earlier pledge of about 1.71 trillion rupiah ($109.6 million).
In response, roughly one month later, Apple proposed an additional $10 million investment—a proposal that was swiftly declined by Indonesian authorities.
By late November, Indonesia rejected Apple’s assertion regarding an initial offer of $100 million intended over two years aimed at advancing research and development initiatives as well as developer academies located both in Bali and Jakarta. While this new deal encompasses funding for these academies, establishment plans for an R&D center appear uncertain—at least at this stage.
Background Context: Tim Cook’s Engagement
This series of negotiations follows Tim Cook’s visit to Indonesia back in April 2024 where he conversed with then-President Joko Widodo about possibly moving manufacturing operations closer to home markets rather than relying solely on imports from China.
Economic Implications
Establishing manufacturing facilities could potentially save Apple considerable costs by reducing tariffs imposed on products imported from China during previous administrations—with certain countries facing either reduced or no tariffs at all
.
A Comprehensive Strategy Moving Forward
viewed through a long-term lens—the proposed $1 billion expenditure remains relatively minor for Apple when weighed against secure market access within growing economies like Indonesia.
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