Indonesia has officially banned the sale of Apple's iPhone 16, declaring its use "illegal" within the country.

This is after Apple failed to meet the local investment requirements necessary for obtaining the required certifications, as explained below.

Investment Commitment Shortfall

The Indonesian Ministry of Industry has pointed out that Apple has only invested approximately 1.48 trillion rupiah (around $94 million) toward local infrastructure and sourcing.

This falls short of the promised 1.71 trillion rupiah, or about $109 million.

This underinvestment immediately impacts the company's ability to receive the TKDN or Domestic Component Level certifications, where smartphones sold in Indonesia should contain at least 40% local content.

Failed to Obtain Certifications

As Apple has not invested sufficiently, the company did not obtain the certification to sell its new model of iPhone in Indonesia.

As a result, it is not possible to download an iPhone 16 on the popular e-commerce portals like Tokopedia, Blibli and Lazada. It is also missing on Apple's Indonesian page or portal.
There are a few statements from the Ministry through which it quite categorically stated that there is no tolerance for sale of an illegal iPhone 16.
Informative Warning Against Illegal Sales

Minister Agus Gumiwang Kartasasmita sternly warned consumers that sales of iPhone 16 sold in Indonesia without proper permits must be considered unlawful.

The government urges consumers to file the sales as unlawful.

The warning reflects Indonesia's position on ensuring that foreign companies doing business there have their local regulations enforced and complied with.

Visit by Apple CEO and Future Prospect

An important issue, however, cropped up following the visit of Apple CEO Tim Cook to Jakarta in April 2024, when he discussed the expansion of Apple in Indonesia with President Joko Widodo.
This includes investments in local manufacturing and developer academies.

Even though these talks are for Apple to improve operations in the country, no swift resolution has been agreed upon as far as certification is concerned, and so, there is no future certainty over the sales of iPhones in Indonesia.

Consumer Effects and Market Forces

The ban leaves Indonesian consumers anxiously waiting for the arrival of iPhone 16. So far, there is a reported 9,000 units in Indonesia which are mainly for personal usage and not on sale to resell.

This would hit many potential buyers that will keep them from buying this model until Apple covers the investments.

This situation not only affects Apple but also represents the larger challenge that foreign tech companies face in navigating local regulations in emerging markets like Indonesia.

Background on Indonesia'sm regulatory environment

Regulations in Indonesia on foreign investments in the tech sector are pretty strict and aimed at promoting domestic manufacturing, as well as ensuring international companies contribute to the local economy.

The country has since 2017 implemented policies that mandate a high percentage of local content in electronic devices.
Many global brands, including Xiaomi and Samsung, have opened local manufacturing facilities to meet these requirements.
Apple is very active in the region and has opened developer academies since 2018, but it has not established manufacturing operations in Indonesia.

This starkly contrasts with competitors, who heavily invested in local infrastructure that would help them to abide by the domestic content requirement and seamlessly operate in the market.

Indonesia holds over 270 million in population with a fast- growing base of tech savvy consumers and is considered one of the most attractive markets for smartphone manufacturers.

But as far as Apple is concerned, it has landed into an interesting situation in an effort to comply with investment regulations at the local level.

The country's smartphone user base is still growing, with an estimated 350 million active mobile phones, increasing pressure on Apple to meet its commitments and secure a foothold in this key market.

Earlier in the month, Apple released iOS 18.1 on October 28, bringing its AI platform, Apple Intelligence, to the iPhone 16 and iPhone 15 Pro.

This update also brings Apple Intelligence capabilities to iPad and Mac. This is one giant leap forward in amplifying the presence of Apple's AI and boosting interest in its newly launched iPhone 16 series.

Summarized, the iPhone 16 ban reflects both Apple's investment challenges and Indonesia's firm stance in promoting its local industry.

The situation remains fluid because consumers and Apple are expecting developments that will determine their future in this Southeast Asia powerhouse.