Indonesia vs Google & Apple
Indonesia banned Apple's iPhones (iPhone 16) from being sold within the country, then the country went to bad the sale of Google phones (Google Pixels) just about a week later.
Indonesia banned Apple's iPhones (iPhone 16) from being sold within the country, then the country went to bad the sale of Google phones (Google Pixels) just about a week later.
The reason, however, is not as critical or exciting as you might think; it's simply due to the country having a rule - well, rules, but we're going to focus on the specific one these two lines of phones seems to have crossed - where it's required for cellphones sold within the country must have 40% of the components manufactured locally.
According to Reuters - Apple refused to comment on the situation[1] - however there are murmurs that Apple wants to build a $100 Million manufacturing plant in Indonesia, while Google played it off with a statement that Google Pixels aren't "officially" distributed in Indonesia[2]. Regardless, Indonesia (not to be confused with India) is one of the largest consumer when it comes to technology, as well as being an easy target for income profit. It's also important to note that in many Asian countries Google and Apple are not the leading smartphone sellers, so this may be a non-starter to begin with.
TKDN
The Rules in Question
So the rule in question is known as TKDN - Tingkat Komponen Dalam Negeri. It's a set of rules that's been established while extending a hand towards foreign investors. The thing is: If you want to play ball, you have to comply towards rules that benefit the local business and economy.
The way the rules work is to break down - based on sectors. Now, it won't surprise anyone that I'm not personally familiar with Indonesian economic sectors - but according to Jarjizaidan[3]:
- Smartphones: Manufacturers must meet a 30-40% local content requirement, which encourages the sourcing of components and assembly labor from Indonesia.
- Automotive: For certain vehicle types, local content requirements range between 70-80%. This includes both parts manufacturing and final assembly processes.
- Electronics: Depending on the product, electronics manufacturers must comply with TKDN levels ranging from 20-40%.
- Electric Vehicle (EV) Manufacturers: Initially set at 60%, the local content requirement for EV manufacturers was temporarily reduced to 40% from January 2024 to December 2026. After this period, the requirement will revert to 60% starting January 2027, providing a transition period for companies to adapt.
Now, again, I'm not some specialist in international economics - and at the risk of upsetting someone (easy to do nowadays) - I'm not against the idea of requiring a notable amount of components and labor being sourced locally. I'd imagine it helps keep local jobs going as well as allows local talent to increase.
We'll see how this pans out for both Apple and Google - especially seeing how Google is dealing some other headaches at the moment.
