Apple offers nearly $100 million to lift iPhone 16 sales ban in Indonesia

Apple Inc. (AAPL) has significantly increased its investment proposal in Indonesia, offering nearly $100 million—almost ten times its original plan—in an effort to persuade the government to lift the sales ban on the iPhone 16, according to sources familiar with the matter.

The proposal would see Cupertino-based Apple invest almost $100 million in Southeast Asia’s largest economy over two years, the people said, asking not to be identified because they’re not authorized to speak publicly, News.Az reports, citing Bloomberg.

Apple’s previous investment plan of close to $10 million would have involved the company investing in a factory making accessories and components in the city of Bandung, located southeast of Jakarta.

After Apple submitted its increased offer, Indonesia’s Ministry of Industry, which last month blocked a permit allowing the sale of the iPhone 16, is now demanding that the technology behemoth alter its investment plans to focus more on research and development for its smartphones in the country, the people said. The Ministry of Industry hasn’t made a final decision on Apple’s newest proposal, they added.

Following Apple’s initial proposal, the ministry called for senior company executives to meet Minister Agus Gumiwang Kartasasmita. But after flying into Jakarta, Apple’s senior executives were told that the minister wasn’t available and so they had to meet with the ministry’s director-general instead.

Apple and the Ministry of Industry didn’t respond to requests for comment.

Apple’s new investment proposal came after the Ministry of Industry last month blocked sales of the iPhone 16 on the grounds the US company’s local unit hasn’t met a 40% domestic content requirement for smartphones and tablets.

According to the Indonesian government, Apple has only invested 1.5 trillion rupiah ($95 million) in the nation via developer academies, falling short of a commitment of 1.7 trillion rupiah. The Southeast Asian nation has also banned the sale of Alphabet Inc.’s Google Pixel phones because of a similar lack of investment.

Indonesia’s hardball tactics appear to be working, with the iPhone 16 ban becoming an example of the pressure new President Prabowo Subianto’s government is putting on international firms to increase local manufacturing as it seeks to boost domestic industries.

Indonesia also resorted to such tactics under the administration of former President Joko Widodo, who blocked ByteDance Ltd.’s TikTok last year to shield its retail sector from cheap Chinese-made goods. This prompted the hugely popular video app to ultimately invest $1.5 billion in a joint venture with Tokopedia, the e-commerce arm of Indonesia’s GoTo Group.

By offering to invest in the country, Apple is seeking to get unfettered access to Indonesia’s 278 million consumers, more than half of which are under the age of 44 and tech savvy.

News.Az