Indonesia unlikely to ease local-content rule to allow i Phone 16 sale

Any concession would be unfair to other smartphone companies, says researcher

- Hariz Baharudin

The back and forth between Apple and Indonesia over the sale of the latest i Phones is testing the allure of the archipelago, as observers note how the protracted dispute highlights the difficulties investors face in doing business in South-east Asia's largest country.

On Nov 19, Bloomberg reported that Apple has increased its offer to invest in Indonesia by almost tenfold to US$100 million (S$133 million) - the American tech titan's latest move to persuade the country to lift its ban on i Phone 16, which was launched worldwide in September.

For weeks, Indonesia and Apple have been in a stand-off over local-content requirements.

Indonesia requires all foreign companies to meet a 40 per cent domestic-content requirement for smartphones and tablets, and Apple was banned from selling its i Phone 16 in October for failing to do so.

The requirement can be met through the firms using locally available staff or materials, software development, or establishing research-anddevelopment facilities.

Apple's previous investment plan of close to US$10 million would have involved it investing in a factory making accessories and components in the city of Bandung, located south-east of Jakarta, Bloomberg reported.

Indonesia's Ministry of Industry is now reportedly demanding that Apple alter its investment plans to focus more on research and development for its smartphones in the country.

Professor Andrew Delios from the Department of Strategy and Policy at NUS Business School told The Straits Times that rejigging the assembly process is a complicated matter.