(Bloomberg) — Indonesia kept a ban on the sale of Apple Inc.’s iPhone 16s, saying its $1 billion plan that includes building an AirTag factory is insufficient to meet local investment requirements.
Domestic content rules require Apple to produce part of its smartphones or components onshore, while the AirTag is only an accessory, Industry Minister Agus Gumiwang Kartasasmita said in a briefing on Wednesday.
“As of this afternoon, the government does not have a basis for issuing the local content certificates” that Apple needs to sell its flagship device in Indonesia, he said. “Apple needs to negotiate with us so that we can issue a certificate.”
Indonesia blocked iPhone 16 sales in October, part of a strategy to persuade the US technology company to invest more in Southeast Asia’s largest economy. Delays in the resumption of sales is depriving Apple revenue from a promising growth market of about 280 million consumers, where it’s fighting for foothold with rivals such as Samsung Electronics Co.
According to Kartasasmita, Apple could be sanctioned for its continued non-compliance with local investment rules, though that would be the government’s last resort. “We will look for other ways or options,” he said, adding that the government has already sent a counterproposal to Apple.
An Apple representative in Indonesia declined to comment.
The decision marks an unexpected turn just hours after Investment Minister Rosan Roeslani told reporters on Tuesday evening that Indonesia had approved Apple’s plan to put up an AirTag facility. The domestic content requirements are under the purview of the industry minister.
Apple had proposed to build a factory by early 2026 and commence production of AirTags, a device that allows users to track their luggage, pets, or other belongings, according to Roeslani. Company executives are in Jakarta to negotiate with the government on the investment proposal.
Rival phone makers like Samsung and Xiaomi Corp. have set up factories in Indonesia to comply with the domestic content regulations introduced in 2017. Other ways to boost local content include sourcing materials, hiring workers, developing apps and investing in developer academies in the country.
“There’s no deadline for compliance,” Kartasasmita said. “If Apple wants to sell the iPhone 16, and especially if they plan to launch the iPhone 17, the decision is entirely up to them.”
—With assistance from Norman Harsono, Faris Mokhtar, Soraya Permatasari and Gao Yuan.