Apple and Indonesia Reach Deal to End iPhone 16 Ban

[MacRumors]

Apple and Indonesia have agreed on terms to lift the country's five-month ban on iPhone 16 sales, according to people familiar with the matter who spoke to Bloomberg. The deal concludes a battle that began in October, when Indonesia refused to issue permits for Apple's flagship iPhone lineup over Apple's failure to comply with domestic manufacturing requirements.

Under the agreement, Apple will invest $1 billion in Indonesia, a significant increase from its previous commitments of $10 million and $100 million that were rejected by the government. The deal is expected to be formalized through a memorandum of agreement to be signed as early as this week, with the Ministry for Industry issuing permits allowing iPhone 16 sales "as soon as possible."

Beyond the monetary investment, Apple has reportedly committed to training local talent in research and development, so that Indonesians can develop software and design their own products. The pledge addresses one of the government's key demands for Apple to establish R&D facilities in the country.

The agreement also includes plans for a manufacturing plant on Batam island that will produce AirTags, Apple's device tracking accessories. This facility will be operated by Apple supplier Luxshare Precision Industry, and is expected to eventually account for 20% of global AirTag production.

Another manufacturing facility is planned for Bandung, about three hours from Jakarta, which will produce other types of accessories. Part of the investment will also fund Apple academies to equip Indonesian students with tech skills like coding.

Despite the substantial concessions, Bloomberg's sources indicated that Apple has no immediate plans to manufacture iPhones in Indonesia.

The deal is a victory for Indonesian President Prabowo Subianto, who directed his ministers to accept Apple's $1 billion investment offer. However, the Ministry of Industry unexpectedly upheld the ban last month while seeking better terms, which have apparently now been agreed.

Indonesia's hardball approach seems to have paid off, securing significant investment from a major foreign company and supporting the government's goal of boosting local manufacturing rather than simply using the nation as a sales market.

For Apple, regaining access to Indonesia's market of 278 million people — over half of whom are under 44 and tech-savvy — comes at a crucial time as its sales in China have slowed. Apple may not be among the top five smartphone brands in Indonesia, but the market offers the company a lucrative growth opportunity.

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Article Link: Apple and Indonesia Reach Deal to End iPhone 16 Ban

 

[senttoschool]

It's like how Trump does business.

 

[The_Gream]

They must have really wanted that market, when they only missed the original investment requirement by like a million dollars, now they have to pay 1000x as much.
Sets a very dangerous precedent, as we know Apple will pass that cost on to other markets, and other markets will start asking for the same or better investments.

 

[wanha]

I'm generally not a fan of countries doing these type of "negotiations", but I'm also aware that large multinational corporations are designed to pump as much profit out of economies as possible, leaving those economies withering and less able to deal with whatever problems arise, because they capture so little of the value.

This is not just a tech thing, but the way in which more and more industries operate, and it's a problem.

 

[cicalinarrot]

I'm not sure why most people on this site seems to assume that what's good for Apple is good for the world.

There seems to be a tendency, especially in the US, to self-identify with corporations, as if their freedom from governments were people's freedom.
In most situations, it seems to be the exact opposite: it's completely private interests (in this case foreign interests, if you can put yourself in Indonesians' shoes for a second) Vs. something that should represent the whole country (either it does in a good or bad way, it's surely more on Indonesians' side than Apple).

 

[twintin]

Will be tough time for Apple to keep up if other countries follow with similar demands (US, Indonesia, India, who else will follow).

 

[thefrost]

That's tough.

 

[Skyscraperfan]

The problem with those huge corporations is the they can send bills from one local branch to another one to save taxes.

Starbucks for example charges their local branches huge sums of money for using the Starbucks name and logo for example, although those branches are 100% owned by their mother company. That costs can be deducted as an expense in a high tax company like Germany. I wonder if Apple does the same trick.

All those companies ask for is that the net revenue that in generated locally is also taxed locally. Apple has a huge profit margin and it should not be able to shift taxes from high tax countries to low tax countries where they did not occur at all or even to countries like the UAE who do not have any corporate taxes.

Indonesia is a very poor country with huge problems. I spent six days in Jakarta last year. It has a few very modern and wealthy districts in the city center, but most of the rest of the city is slums. I am glad they are tough on giants like Apple.

 

[wbeasley]

The problem with those huge corporations is the they can send bills from one local branch to another one to save taxes.

Starbucks for example charges their local branches huge sums of money for using the Starbucks name and logo for example, although those branches are 100% owned by their mother company. That costs can be deducted as an expense in a high tax company like Germany. I wonder if Apple does the same trick.

All those companies ask for is that the net revenue that in generated locally is also taxed locally. Apple has a huge profit margin and it should not be able to shift taxes from high tax countries to low tax countries where they did not occur at all or even to countries like the UAE who do not have any corporate taxes.

Indonesia is a very poor country with huge problems. I spent six days in Jakarta last year. It has a few very modern and wealthy districts in the city center, but most of the rest of the city is slums. I am glad they are tough on giants like Apple.

And Indonesia have started work on the new greener capital city that many think will never actually be delivered

Being tough on Apple will not filter down to the workers.

We've been going to Bali for over 20 years, the people are awesome, but ask any of them and they will tell you of the corruption that's rampant.

 

[segfaultdotorg]

$1B is a pretty decent bribe… where do I sign up?

 

[StuBeck]

They must have really wanted that market, when they only missed the original investment requirement by like a million dollars, now they have to pay 1000x as much.
Sets a very dangerous precedent, as we know Apple will pass that cost on to other markets, and other markets will start asking for the same or better investments.

With the profits Apple makes, there is no need for them to pass along the low cost of their new investment. There also are only 3 countries with a larger population than Indonesia, so I don't think there can be much concern of "better" investments being required everywhere.

 

[alchemistmuffin]

The deal is expected to be formalized through a memorandum of agreement to be signed as early as this week, with the Ministry for Industry issuing permits allowing iPhone 16 sales "as soon as possible."

I also believe the recent White House visit might have something to do with this…….. 🤔

I can probably tell the president told Indonesia to either take the deal Apple proposed or be prepared to be slapped with tariffs and major trade sanctions for refusing to work with US companies.

 

[johnsawyercjs]

It's like how Trump does business.

Yes, but the difference is this might actually benefit a lot of people

 

[The_Gream]

With the profits Apple makes, there is no need for them to pass along the low cost of their new investment. There also are only 3 countries with a larger population than Indonesia, so I don't think there can be much concern of "better" investments being required everywhere.

Apple makes about 25 billion a quarter.
They just announced a 4 year 500 billion dollar investment in the USA. The EU was (trying to) fining them for 10% of their global on what felt like a monthly basis (how much they ended up paying I don’t remember).
Indonesia might be the 4th largest country by population but what is the standard of living? What’s the average monthly wage? Probably not enough to buy premium handsets, so this will be older handsets and lower cost ones.
Plus I don’t remember the article saying if this billion dollar investment counts toward their yearly requirement or is considered separate. If not, they still have to make those investments too.

Apple sales revenue by country/region 2025| Statista

The Americas are Apple’s largest regional market, bringing in net sales of 52.65 billion U.S.

www.statista.com

The revenue for the Asia Pacific is ~1 billion a quarter, but how much of that comes from Indonesia directly? So where is Apple going to get this money from? Probably somewhere else. This will end up being a long term investment that probably won’t have a proper ROI for 5-10 years.

But remember, they are only doing this investment because they failed to meet the yearly requirement by like a million dollars. There is a big difference between 1 mil and 1 bil.

 

[adib]

It's like how Trump does business.

Yes. Both presidents have their similarities.

 

[adib]

Yes, but the difference is this might actually benefit a lot of people

The new factories? Probably a few hundred factory workers making AirTags (and likely power adapters). As I wrote earlier, many other computer companies made their power adapters there.

 

[Mousse]

The problem with those huge corporations is the they can send bills from one local branch to another one to save taxes.

Starbucks for example charges their local branches huge sums of money for using the Starbucks name and logo for example, although those branches are 100% owned by their mother company. That costs can be deducted as an expense in a high tax company like Germany. I wonder if Apple does the same trick.

Apple had a shell company in Ireland...😇😇😇

 

[Skyscraperfan]

Apple had a shell company in Ireland...😇😇😇

Yes, but does Apple charge every Apple store a million dollars a year or so to use the logo? That is how many companies avoid taxes. It is tax evasion.

 

[johnsawyercjs]

The new factories? Probably a few hundred factory workers making AirTags (and likely power adapters). As I wrote earlier, many other computer companies made their power adapters there.

I'm not referring only to the new factories, but to the tech training, etc. that Apple is now obligated to provide, which seems to be a broader effort aimed at more people.

 

[adib]

Yes, but does Apple charge every Apple store a million dollars a year or so to use the logo? That is how many companies avoid taxes. It is tax evasion.

Heck, Apple Ireland could charge each store a few hundred dollars per MacBook for the OS and bundled apps. Then Apple China could charge a few thousand for the hardware and use it to pay FoxConn.