Indonesia’s Protectionist Policies Aimed at Attracting Tech Investment May Backfire

CNBC | 16 December 2024

The government is vying for more investments and onshoring from the company before it grants wider access to its large consumer markets.

Apple CEO Tim Cook speaking alongside Indonesian Minister of Communication and Information Budi Arie Setiadi and Indonesian Minister of Industry Agus Gumiwang Kartasasmita during a press conference after meeting with Indonesia’s President Joko Widodo at the Merdeka Palace in Jakarta on April 17, 2024. (Getty Images)

Indonesia’s efforts to attract capital from Apple and other tech companies through local investment and manufacturing requirements are not enough to yield long-term gains and may backfire, economists warn. 

Because of Indonesia’s long-standing local content policies, or “TKDN,” Apple has been unable to sell its latest iPhone model in the country until it invests or sources more components locally.

On Dec. 3, Indonesia’s deputy industry minister told reporters that the country plans to increase the local content requirement for smartphone investments.

The plans come after the government turned down a $100 million Apple proposal aimed at paving the way for iPhone 16 sales. Instead, the government is now asking Apple to invest $1 billion in cell phone component production in the country.

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