Indonesia's industry minister says the iPhone 16 will go on sale "as soon as possible". (Reuters: Florence Lo)
In short:
The Indonesian government has agreed to terms with Apple to lift a ban on sales of the iPhone 16.
The device was blocked from sale for not meeting an Indonesian requirement that phones contain 40 per cent locally manufactured components.
What's next?
Apple has agreed to build several manufacturing facilities and a "first of its kind in Asia" research and development facility in Indonesia.
Apple will be allowed to sell its latest smartphone in one of Asia's largest markets after the US tech giant reached a deal with the Indonesian government following "tough" negotiations spanning five months.
The government in October prohibited the marketing and sale of the iPhone 16 over the tech titan's failure to meet regulations requiring 40 per cent of mobile phones be made from local parts.
As part of a memorandum of understanding signed on Wednesday, Industry Minister Agus Gumiwang Kartasasmita said Apple had pledged to establish a semiconductor research and development facility in Indonesia — "the first of its kind in Asia".
Apple CEO Tim Cook during a visit to Jakarta in April last year. (Reuters: Willy Kurniawan)
A statement from the Ministry of Industry said it had approved Apple's investment and innovation plan spanning 2025 to 2028.
Under the plan, the company will build two other facilities: one in the city of Bandung in West Java to manufacture accessories and, as previously reported by the ABC, another in Batam near Singapore worth $US150 million ($238 million) to produce AirTags.
AirTags are tracking devices that Apple markets as being used to locate a user's belongings such as a wallet or keys.
Investment and Downstreaming Minister Rosan Roeslani said in mid-January that the Batam facility was scheduled for completion by early 2026.
Apple 'can't wait' to sell iPhones in South-East Asia's biggest market
The lengthy negotiations with Apple were "tough" according to Mr Kartasasmita, who was quoted by CNBC Indonesia as saying the iPhone 16 would go on sale "as soon as possible".
Apple Indonesia told the AFP news agency in a statement: "We're excited to expand our investments across Indonesia and can't wait to bring all of Apple's innovative products, including the iPhone 16 family, with the all new iPhone 16e, to our customers."
Indonesia rebuffed the company's earlier offer to invest $US100 million via an accessory and component plant in November, arguing the proposal had not "met principles of fairness".
Mr Kartasasmita cited larger investments by Apple in neighbouring Vietnam and Thailand.
Apple then pledged $US1 billion in January to build the AirTag factory, which still failed to finalise negotiations.
Indonesia is South-East Asia's largest economy with a middle class of some 48 million consumers, but there is no official Apple store in the country.
Even so, analysts say it has already overtaken Thailand to become the largest market for iPhones in the region.
Apple chief executive Tim Cook visited Indonesia last year as the company explored ways to invest in the country and diversify supply chains away from China.
Indonesia likely to continue playing hard ball with multinationals
Indonesia had deployed "this same trick" in recent years by banning TikTok, blocking Netflix, and refusing to export nickel "until they got investment on terms considered more beneficial to the national interest", said James Guild, a trade expert from the Indonesian International Islamic University.
"You should expect that we're going to see more of this, where they leverage market access to get more concessions out of foreign investors," Dr Guild said.
"If US tech firms — say Tesla or Apple or whoever — are hesitant to invest in Indonesia, Chinese firms will and have.
"Indonesia is capitalising on this by demanding, and often getting, more favourable investment conditions."
But he said it remained unclear whether this was a net positive for the Indonesian economy long-term.
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Soon after prohibiting the sale of iPhone 16s last year, Indonesia imposed a similar ban on Google Pixel devices.
In January, the country's antitrust agency ordered Google to pay fines of around 202 billion rupiah ($20 million) for monopolistic practices.
It found the Google Play Store, which has around 93 per cent market share in Indonesia, had forced users to pay fees of up to 30 per cent on Google Play Billing, a rate higher than other payment systems.
Despite a ban on iPhone 16 phones, the government had allowed the devices to be carried into Indonesia if they were not being traded commercially.
Authorities estimated that 9,000 iPhone 16 units purchased abroad had already entered the country for personal use by October 2024.
ABC/AFP