Indonesia Sustains iPhone Ban Despite Apple’s $1B AirTag Factory Investment

Indonesia has sustained the ban on the sale of iPhone 16s even after Apple committed to build a production facility in the country. According to Reuters, the Apple Indonesia ban was maintained because the iPhone maker has yet to comply with the country’s rules.

Indonesia also said that the $1 billion that the big tech plans to spend on the construction of the Apple AirTag factory is not enough to meet local investment requirements.

Apple Compliance Issue

The government announced the Indonesia iPhone 16 ban last year. This happened after the company failed to comply with the company’s regulation that requires smartphones sold in the country to comprise a minimum of 35% locally-manufactured parts.

Speaking during a briefing on January 8, 2025, Indonesia’s Industry Minister Agus Gumiwang Kartasasmita stated that the country’s content rules require Apple to manufacture part of its iPhone components in the country.

Kartasasmita said that Apple had settled a deal to construct a production factory on Batam Island for its Airtag tracking device. However, the minister noted that AirTag is just an accessory and would not count as an iPhone component that is produced locally.

“There is no basis for the ministry to issue a local content certification as a way for Apple to have the permission to sell iPhone 16 because (the facility) has no direct relations,” he said.

Innovative Investment

Indonesia’s investment minister had previously said that the Apple Airtag factory will start operating next year. Kartasasmita held meetings with Apple’s VP for Global Government Affairs, Nick Ammann for two days.

Following the meeting, Kartasasmita said that the iPhone manufacturer had made an innovative investment proposal and that negotiations were underway. Indonesia started implementing the iPhone 16 sales ban in October 2024 as part of a broader strategy to push Apple into investing more in its economy, which is the largest in Southeast Asia.

Apple has not established any production facilities in Indonesia. However, the US technology company has set up app developer academies in the country since 2018. The country has a population of about 280 million people.

Impact of Indonesia’s iPhone Ban

Delays in lifting Indonesia’s iPhone ban are causing Apple revenues to drop. The ban is depriving the big tech company an opportunity for its market share in the 280 million consumer economy where it’s struggling to get a foothold due to rivals like Samsung.

Kartasasmita says that the Indonesian government could sanction Apple for its continued non-compliance as a last resort. He added that a counterproposal to the $1 billion investment deal has already been dispatched to the big tech.

The latest decision was largely unexpected as it came just a few hours after Indonesia’s Investment Minister Rosan Roeslani informed reporters that the country had Approved Apple’s planned investment towards establishment of the AirTag manufacturing facility. Matters of compliance with Indonesia’s content requirements are handled by the Industry Minister.

Before Indonesia blocked iPhone sales in 2024, Apple had been cleared by the government due to its investment in establishing developer academies in the country. At the time, the tech company had committed to invest about $110 million. But, Apple’s actual investment fell short by about $10 million. It remains unclear whether Apple would have continued to sell iPhone 16 in the country if it had met its commitment fully.