Indonesia’s new fight with Apple over phone 16 sales offers a revealing windows into the Prabowo government’s emerging business and business plan.
President Prabowo Subianto wants to turn Indonesia from a merely consumer business into a high-tech production gateway, just like his father Jokowi. However, the conflict shows a basic connect between Indonesia’s desires and its implementation.
The conflict started in October when Indonesia prohibited sales of the iPhone 16 due to Apple’s failure to comply with rules mandating 40 % local developing content. In response, Apple made an initial investment offer of US$ 10 million to establish a mill in Bandung in collaboration with its suppliers, which was later upgraded to$ 100 million, including plans for research and development features and accessory part production.
Industry Minister Agus Gumiwang Kartasasmita argued that the plan “has never met principles of justice,” while economy minister Agus Gumiwang Kartasasmita rebuffed it. On the surface, Indonesia’s status seems fair. With 280 million people, Southeast Asia’s largest economy doesn’t want to be only another consumer market for technology companies.
The government might point to Samsung’s at least$ 20 billion in investments and Oppo’s expanding presence as proof that major companies can meet their terms. Indonesia’s desire to advance up the value chain and establish local manufacturing capabilities is both reputable and proper.
Southeast Asia’s largest economy may normally be a desirable target as global supply chains deteriorate and businesses look for alternatives to China. However, the president’s aggressive approach to achieving these goals may become counterproductive.
Without fostering true technological growth or technology transfer, mandating regional assembly without the ecosystem necessary for significant manufacturing can lead to superficial compliance, with products only being assembled enough to meet origin requirements.
The phone policy’s usefulness is also unclear. Apple dominates Indonesia’s smartphone market by only 2 %, and wealthy people can buy products in nearby nations like Singapore or Malaysia.
There’s good considerable overlap between possible phone 16 customers and people who often travel to these adjacent countries, limiting the plan’s leverage.
Indonesia’s difficulties become obvious when comparing them to Vietnam, a local competition that has properly attracted high-tech production. Vietnam, with a smaller community, hosts 35 Apple providers compared to Indonesia’s one part manufacturer and has established itself as a gateway for global supply chains.
Labor costs are significantly lower, with Hanoi’s minimum wage at$ 190 monthly compared to Jakarta’s$ 325. The country has also built world-class infrastructure, with three seaports ranked among the global top 50 for cargo throughput—Ho Chi Minh City ( 26th ), Hai Phong ( 33rd ), and Cai Mep ( 50th ) —compared to just one from Indonesia.
Also, Vietnam’s 17 free trade agreements have enhanced its inclusion into global supply chains, making it a more interesting place for manufacturing opportunities.
China offers another convincing case. Through laws like mandating joint ventures between foreign and domestic companies, it succeeds in fostering tech transfer and capacity-building.
As a problem for marketplace access, these requirements made overseas companies share technologies with local partners, making it necessary for Chinese firms to get advanced technologies and expertise. Apple CEO Tim Cook has apparently stated that the company may increase investment and support provide chain development perhaps this year despite rising political risks.
Similar to Vietnam, it has worked to foster partnerships between foreign investors and local businesses to promote tech shift by putting in place clear regulatory frameworks, providing incentives for high-tech industries, and promoting business climates.
The government estimates Apple generated 30 trillion rupiah ($ 1.9 billion ) from product sales in Indonesia last year. Indonesia risks deterring the pretty investment it wants to get by adopting such an intense position without creating necessary conditions for manufacturers.
The rejection of Apple’s$ 100 million expense is likely to be perceived by many as rigidity or exaggerated governance, potentially deterring another foreign investors.
Despite being the fourth-largest nation in the world, Indonesia is now struggling to gain respect internationally. The nation needs more than just sporadic displays of regulatory force to improve its standing and draw valuable investment.
It requires a complex framework for utilizing economic leverage that combines international business interests with domestic development objectives.
President Prabowo’s presidency appears to be at a juncture. Indonesia has an opportunity to place itself carefully in light of big markets turning inwards and shifting global supply chains.
But this requires moving beyond oppressive laws toward creating real dynamic advantages—streamlining rules, developing system, and fostering tech transfer through incentives rather than demands.
In an age of fragmenting global supply chains and shifting energy relationships, fresh market sizing isn’t enough—it’s how you utilize it that matters. Indonesia’s development as a hub for manufacturing depends not on imposing restrictions on investment through market access, but rather on creating an ecosystem that will inevitably draw and retain it.
Asher Ellis is a pupil at Yale University.