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November 28, 2024 | 01:46 pm
TEMPO.CO, Jakarta - The Indonesian government has rejected Apple's recent investment proposal worth Rp1.58 trillion, which was intended to secure approval for the circulation of its latest smartphone iPhone 16 in the country. This decision comes despite the significant increase in the proposed investment, which is ten times higher than previous unfulfilled commitments by the American tech giant.
Industry Minister Agus Gumiwan Kartasasmita announced the rejection during a leadership meeting on Monday, November 25, 2024. “Based on today's leadership meeting, it was decided that it is reasonable for Apple to increase its investment based on fairness aspects,” he said.
Agus further explained that the investment proposal did not meet the necessary fairness criteria. He highlighted the company's zero investment in production facilities or factories in Indonesia compared to its operations in other countries, particularly Vietnam.
Minister Agus outlined four fairness aspects that Apple has not fulfilled: the comparison of Apple's global investments, the comparison of investments in other mobile phones, handheld computers, and tablets (HKT) available in the country, the creation of added value and state revenues, and the creation of jobs.
Comparison of Apple's Investments in Other Countries
Apple's strategic investments and operational expansion have been significant, particularly in Vietnam. This country has emerged as a crucial player in Apple's global supply chain, serving as a benchmark for the Indonesian government to assess the company's commitment.
“We believe that it is not fair to mention increasing the investment by up to 10 times. We should consider whether the value of US$100 million is fair or not for Indonesia, compared to Apple's investments in other destination countries such as India, Vietnam, and Thailand,” said Ministry of Industry spokesperson Febri Hendri Antoni Arief Friday, November 22, 2024, as cited by Antara.
Apple's substantial expansion in Vietnam is evident in the addition of eight new partners in 2024, bringing the total number of vendors in the country to 35. This growth has propelled Vietnam to a leading position as an Apple supplier in Southeast Asia and the fourth-largest globally, trailing only China (158 local partners), Taiwan (49), and Japan (44).
Over the past eight years, Apple has increased its supplier base in Vietnam, collaborating with industry giants such as Foxconn, Luxshare, Samsung, Intel, and LG. Vietnam is now home to large-scale manufacturing facilities that assemble various Apple products, including AirPods, iPads, and Apple Watches.
Comparison Figures of Apple's Investments in Other Countries
To ensure a fair and equitable investment, the Indonesian government has conducted a thorough analysis of Apple's proposed investment, considering the company's global operations and profitability in the domestic market.
Minister Agus emphasized that Apple must fulfill its outstanding investment commitment in 2023 of US$10 million. This existing obligation is separate from the recent proposal, which pertains to Apple's Domestic Component Level (TKDN) certificate requirements for the 2024-2026 period.
For records, Apple is required to submit a new investment proposal every three years as part of the agreed-upon innovation scheme to obtain the necessary TKDN certification.
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