Deal reached as Indonesia opens its doors to iPhone 16 sales

An agreement between the Ministry of Industry (MOI) and Apple has opened a new chapter in Indonesia's relationship with the Cupertino-based tech giant, after five months of negotiations have resulted in significant investment commitments for the period from 2023-2029.

"The Ministry of Industry has approved Apple's innovation investment plan for the period 2025-2028 and has also signed an MoU with Apple for investment commitments for the period 2023-2029," Industry minister Agus Gumiwang Kartasasmita said at a press conference in Jakarta, Wednesday (February 26).

Apple sent the following statement to the media, "We're excited to expand our investment in Indonesia, and look forward to bringing all of Apple's innovative products, including the iPhone 16 line, as well as the new iPhone 16e, to our customers here."

Apple's strong position in Indonesia's premium market

Although the discontinuation of iPhone 16 sales since last October has caused concern, Apple's position in the Indonesian market remains significant, with Statista data showing Apple has a market share of around 11% in the country. According to Counterpoint Research, before the iPhone 16 sales ban and the launch of the Samsung Galaxy S25, the iPhone dominated the premium segment (priced above $600) in the third quarter of 2024.

This underscores Apple's continued importance in Indonesia’s premium product marketing strategy. The resumption of authorised iPhone sales will further solidify this position, providing certainty for marketers and retailers in planning premium product strategies.

The investment of $160 million in hard cash to fulfill the TKDN Scheme 3 requirements has the potential to strengthen Apple’s supporting infrastructure. For marketing professionals, this presents opportunities to leverage programs like Apple Search Ads or co-marketing initiatives with Apple Authorised Resellers, supported by enhanced local backing.

Understanding TKDN schemes and Apple's strategic choices

MOI Regulation No. 29/2017 stipulates three schemes for obtaining a TKDN (Domestic Component Level) certificate for mobile phones, handheld computers, and tablets.

• Scheme 1 requires companies to establish manufacturing facilities in Indonesia, with at least 30% local components to obtain a TKDN certificate.
• Scheme 2 mandates direct investment in local software development.
• Scheme 3, chosen by Apple, focuses on investment in innovation through education, training, and research & development (R&D) in information and communication technology.

Apple’s decision to opt for Scheme 3 aligns with its business model, which prioritises protecting its global supply chain and maintaining stringent manufacturing standards. As a result, Apple has been reluctant to build iPhone assembly plants outside established hubs like China, India, and Brazil.

"Apple itself admits that it has not been fully compliant with the rules in Scheme 3," said Industry minister Agus Kartasasmita. Despite choosing Scheme 3 in 2017, Apple’s implementation has been suboptimal, particularly in the R&D sector.

With the new agreement, Apple has now fully committed to Scheme 3, investing $160 million in cash, establishing an R&D center, and launching various educational programs. This strategy allows Apple to maintain its product quality while meeting Indonesia’s regulatory requirements.

Apple R&D Center: Technology ecosystem development

Apple's commitment to establish an R&D center in Indonesia is also a strategic step for the local technology industry. As the second R&D center outside the United States and the first in Asia, this center has the potential to strengthen Indonesia's technological capacity.

"The Ministry of Industry and Apple will jointly create an Apple Manufacturing Roadmap until 2029, which will be a commitment to expand Apple's GVC presence to Indonesia," explained the minister.

For the marketing and advertising industry, this development creates collaboration opportunities with local talents who have a deep understanding of Apple technology. Collaboration with 15 Indonesian universities, including ITB, UI, UGM, and ITS who are members of the Indonesia Chip Design Collaborative Center (ICDEC), has the potential to produce technology solutions that are more relevant to local needs.

Global supply chain: B2B marketing opportunities

An important aspect of this deal is the inclusion of Indonesia in Apple's global supply chain. ICT Luxshare will invest $150 million to manufacture AirTags in Batam, making Indonesia a 65% supplier of AirTags for the global market. AirTag battery components will be sourced from domestic manufacturers, while Long Harmony in Bandung will produce mesh fabric for AirPods Max.

This supply chain development is more meaningful in the context of B2B marketing than the prestige of "Made in Indonesia" for end consumers. Local companies that are part of Apple's supply chain gain credibility as partners of global manufacturers, opening up new business opportunities in the B2B segment.

For B2B marketing specialists, this is an opportunity to develop communication strategies that highlight the capabilities of local companies as part of a global ecosystem of manufacturers.

Crisis management and brand reputation

The case of Apple's negotiations with the Indonesian government offers valuable lessons in crisis communications management. Apple admitted that it had not fully complied with the Scheme 3 rules it had opted for since 2017, but managed to reach a productive agreement.

"This is a good precedent, that the Ministry of Industry has sought law enforcement so that global companies comply with applicable regulations in Indonesia," said the minister.

For corporate communications practitioners, Apple's approach to dealing with regulatory challenges provides a case study on how to turn a potential crisis into an opportunity to strengthen long-term relationships.

Impact on market segmentation strategy

With iPhone prices remaining premium, marketing practitioners need to understand that this deal does not necessarily expand Apple's product range to the lower-middle segment. iPhone remains a product for the upper-middle segment.

However, Apple's commitment to Apple Academy and other educational programs has the potential to expand the ecosystem of Apple-based applications and services in Indonesia. The Ministry of Industry estimates the multiplier effect of Apple's innovation development program to reach $72.3 million, including $25 million from startups founded by Apple Academy graduates.

For marketers, this means the possibility of more affordable iOS-based local services and apps, even if the hardware remains premium. This "premium hardware, accessible software" strategy opens up opportunities for more inclusive marketing campaigns without compromising Apple's premium positioning.