Apple Inc. and Indonesia have reached an agreement that will lift the country’s ban on iPhone 16 sales, ending a five-month standoff that saw the US tech giant increase its promised investment in the country to $1 billion, Bloomberg reports, citing sources familiar with the matter.
The Ministry for Industry, responsible for enforcing the ban, is expected to sign a memorandum of agreement with Apple as early as this week, with a press briefing to follow. The ministry intends to issue a permit allowing iPhone 16 sales as soon as possible, according to sources who requested anonymity.
The resolution comes after Indonesia initially refused to issue a sales permit for Apple’s latest devices in October, citing non-compliance with domestic manufacturing requirements for smartphones and tablets. In response, Apple pledged a $1 billion investment, a proposal President Prabowo Subianto directed his ministers to accept. However, the Ministry of Industry unexpectedly maintained the ban last month, seeking more favorable terms.
Beyond the $1 billion investment, Apple will now commit to training local talent in research and development on its products, enabling them to develop similar software and design their own goods, sources said. This move is intended to satisfy the government’s push for Apple to establish R&D facilities within Indonesia. The innovation investment will be conducted through programs distinct from the existing Apple academies.
While Apple currently has no plans to manufacture iPhones within the country, both parties have agreed to the terms for lifting the ban. However, given Indonesia’s history of backtracking on decisions, the possibility of the deal falling through still exists.
The deal follows Apple’s recent settlement of a $10 million debt to the Indonesian government for non-compliance with local regulations between 2020 and 2023.
The agreement marks a significant win for Indonesia, as its assertive tactics have resulted in a major foreign company increasing its investment to foster local manufacturing and develop domestic capabilities, rather than simply utilizing the nation as a sales hub. The government had previously stated that Apple had invested only around $95 million in Indonesia.
This agreement also comes at a strategic time for President Prabowo Subianto. The perception of a US tech giant yielding to his administration could bolster his domestic standing, particularly after recent policy reversals and spending cuts sparked protests.
For Apple, the agreement unlocks access to Indonesia’s expansive consumer market at a time when sales in China are slowing. While Apple is not currently among the top five smartphone brands in Indonesia, the country’s population of 278 million, with a large proportion being tech-savvy individuals under the age of 44, presents a valuable opportunity.
As part of the $1 billion investment, Apple plans to establish a plant on the island of Batam to produce AirTags, a device for tracking belongings. Luxshare Precision Industry Co., a key Apple supplier, will operate the plant, eventually accounting for 20% of global AirTag production.
