Apple has upped the proposed investment from an initial $10 million offer early this month to a revised amount of $100 million.
The enhanced proposal is expected to convince Indonesian authorities to lift the ban imposed on the sale of iPhone 16 over unmet domestic content requirements.
Investment to Be Spread Over Two Years
Bloomberg reported that the $100 million funding would be distributed over two years. However, Indonesia's Ministry of Industry is asking for a greater proportion of the funds intended to support research and development of smartphones inside the country. This move also resonates well with the intentions of the administration in boosting domestic innovation and industry capabilities.
The Ban of iPhone 16 Sales: What Triggered It?
In October, Indonesia blocked the sale of Apple's iPhone 16, citing the inability of the smartphones to meet a 40% domestic content rule. Additionally, the government pointed to investment through the company's developer academies as amounting to only 1.5 trillion rupiah ($95 million) and hence does not fulfill the previous promise made by the company of 1.7 trillion rupiah.
"The iPhone 16 devices imported by registered importers cannot yet be marketed domestically," the ministry spokesperson, Febri Hendri Antoni Arif, said in a statement last month. "Apple Indonesia has not fulfilled its investment commitment to obtain ... certification."
Negotiations Stuck on Several Obstacles
Despite Apple's increased offer, the Ministry of Industry has yet to make a final decision.
Recent attempts by Apple executives to meet with Indonesia's Industry Minister, Agus Gumiwang Kartasasmita, were unsuccessful, as the latter was merely able to be consulted with one of its director-generals.
Why Apple Sees Indonesia as an Important Market
Indonesia, with 280 million people and 354 million active mobile phones, is a prime market for Apple. Winning this market is important because Apple has aggressive competition from Android companies, including many that comply with the domestic content requirements.
If the improved version of the proposal gets approved, it could enhance Apple's foothold in Southeast Asia's largest economy while boosting Indonesia's smartphone research and development capabilities. However, negotiations raise concerns about the difficulties global corporations face in following local regulatory norms and market-surfing vulnerabilities.
Answering Indonesia's request, the iPhone maker is looking not only to lift the ban in place but also to lay the groundwork for further potential growth in an expanding market.
The eventual results of these negotiations can have significant long-term implications for Apple as well as Indonesia's tech industry.
In September 2023, Indonesia also banned purchases on TikTok as part of its crackdown on e-commerce platforms in social media. This means that Southeast Asian countries do not favor any kind of social media transactions.
It should be noted that Indonesia wanted to see it as two separate entities. If people will buy goods online, it should be done on an e-commerce site and not on a social media app. What's more, the government also said that this would protect the users' data for commercial purposes since many companies collect data without consent.
Indonesia said that this change would also apply to the sale of overseas goods, and not only on domestic products and services.
