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No company wants a ban on its products. But a decision by Indonesia’s government to block Apple from selling its latest iPhone 16 devices in south-east Asia’s largest economy is far from disastrous, even if the timing is unfortunate.
The iPhone 16 cannot be marketed in the country as Apple’s local unit is yet to fulfil the country’s 40 per cent local content requirement for smartphones, the industry ministry has ruled. The government had said earlier this month that Apple’s investment in Indonesia — of Rp1.5tn ($95mn) so far — was short of a Rp1.7tn commitment.
The government has been pushing a “Made in Indonesia” policy to bring in more foreign investment by making it harder for companies to import goods.
Telecommunications products require certification to be sold in the country. At least 40 per cent of a product’s value needs to be produced or originated in Indonesia, which includes domestically sourced capital goods, services and raw materials. Other options to fulfil that value requirement include developing applications domestically, or creating other innovative products within the country. Apple has chosen to start building developer academies locally.
The ban does come at an unfortunate time for Apple. Sales of the iPhone have been growing in Indonesia, hitting a 40 per cent share of the “premium” smartphone market, which includes devices costing more than $600. Across the market, Indonesia’s smartphone unit sales have grown this year, increasing by a fifth in the second quarter. The take-up of 5G smartphones has been accelerating, with unit sales doubling during the period.
Demand for the iPhone 16 has been strong in Asia, especially in China, since its launch in September. In China, sales rose 20 per cent in the first three weeks after its launch compared with the 2023 model, according to research firm Counterpoint.
The immediate impact on Apple’s topline should be put in perspective, however. Yes, Apple sales in Indonesia have been growing in recent years. But when looking at the market as a whole, Indonesia is still dominated by the Android operating system which accounts for 87 per cent of the total market. Indonesia is still a relatively small market for Apple: iPhones account for about a tenth of the total 34mn smartphones sold a year in the country. To put that into context, Apple sold 235mn smartphones globally last year.
Indonesians who really want the iPhone 16 could pay high prices to get one via unofficial routes. The government’s ban could easily hurt local consumers more than it helps the economy.
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