Apple iPhone 16 ban on local production in Indonesia

The iPhone 16, released globally in September, now faces a trade block in Southeast Asia’s largest economy, which is demanding stricter investment laws to encourage domestic production. Indonesia has imposed a ban on the sale of Apple’s recently released iPhone 16 due to the tech company’s non-compliance with local manufacturing requirements, the country’s industry ministry said.

Apple has not yet satisfied the ministry

Apple has a strong consumer base in Indonesia, especially among the tech-savvy youth; with more than 100 million people under the age of 30, the demand for high-end smartphones is high. However, the lack of an official Apple store has forced Indonesian consumers to rely on third-party or resale platforms.

Apple’s current operations have yet to meet the ministry’s requirement that 40 percent of components for imported devices be locally sourced. To reach that threshold, Apple needs to both increase investment in local manufacturing and integrate Indonesian materials into iPhone production.

According to The Guardian, ministry spokesman Fabri Hendri Antony Arif confirmed on Friday that the iPhone 16, while authorized for personal use, is not authorized for commercial sale. “Apple Indonesia has not fulfilled its investment obligations to obtain certification,” Arif said, stressing that registered importers who import the devices cannot legally sell them in Indonesia.

As of early October, reports indicate that Apple has invested 1.5 trillion rupiah of the promised 1.7 trillion rupiah, although the company has yet to fulfill its commitment in full.

9000 units of iPhone 16 in the country

Despite the restrictions, around 9,000 iPhone 16 units are reported to have entered the country, although any commercial sale of the devices remains banned. Indonesia has previously imposed similar restrictions to encourage local production in many industries. For example, the country has restricted imports of more than 4,000 items, from laptops to raw materials, with mixed results.

Some companies have responded by curtailing operations, citing supply shortages, while Indonesia’s ban on mineral ore exports has successfully catalyzed the growth of the domestic battery industry.

Apple production in Indonesia

Apple’s limited investment in Indonesia’s manufacturing sector contrasts with the growing success of other smartphone makers. China’s Xiaomi, Oppo and Vivo, along with South Korea’s Samsung, lead Indonesia’s smartphone market, according to Counterpoint Research. Meanwhile, Indonesia remains an attractive but underserved market for Apple, which has strong market penetration in other parts of Asia. The country has about 350 million active mobile phones, which even exceeds its population of approximately 280 million.

In April, Apple CEO Tim Cook met with then-President Joko Widodo and his successor, Prabowo Subianto, in an effort to strengthen Apple’s ties to Indonesia. During his visit, Cook highlighted the company’s plans to expand its developer academies and explore investment opportunities to diversify its supply chain outside of China.

But until Apple can fully meet the demands of local production in Indonesia, the ban on its iPhone 16 device highlights the challenges the company faces in one of Asia’s fastest-growing markets.