The pact is set to end a five-month tussle that started in October 2024 after Indonesia refused to issue a sale permit to Apple, citing its failure to comply with domestic manufacturing requirements for smartphones and tablets.
Apple then pledged to invest US$1 billion in Indonesia, an offer President Prabowo Subianto directed his ministers to accept. However, the Ministry of Industry last month unexpectedly upheld the ban as it sought better terms.
The deal is a win for Indonesia, with its hardball tactics paying off to get a major foreign company to invest more to develop its goods in the country and boost local manufacturing, instead of merely using the nation as a sales hub.
The government had previously said that Apple had invested only about US$95 million in Indonesia.
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The agreement also comes at an opportune time for Prabowo. The optics of a US tech giant yielding to his administration could be used to boost his domestic standing, which has taken a hit following multiple policy U-turns that have generated confusion.
On top of that, his plan for sweeping spending cuts that threatened jobs and scholarships triggered days of protests last week.
For Apple, the deal gives it access to Indonesia’s massive consumer market at a time when sales in China have slowed.
Though Apple ranks outside the top five smartphone brands in Indonesia, the country’s population of 278 million people — more than half of whom are under the age of 44 and tech savvy — is too good an opportunity to miss.
