The Apple investment saga in Indonesia highlights the tension between government ambitions, expectations, and the realities of global business strategies.
Tirto published an article about what’s happening with the Apple investment story in Indonesia with quotes and statements from government officials and analysts. It wouldn’t be the Indonesian government if it didn’t generate drama out of foreign relations or commercial arrangements worthy of a telenovela.
A few things about this drama. Apple has yet to deposit or realize the last $14 million of its $100 million investment commitment made in 2016. It’s chump change for the company but necessary to unlock the permit for the latest iPhones and end the sales ban which the government enacted last year because of it. Only Apple knows definitively why they haven’t delivered on this. Meanwhile there’s been no update on the status of the Bali Apple Academy, announced by Tim Cook in April on his visit to the country. This fourth Academy in the country is likely to be part of the unrealized investment.
Indonesia has also been on Apple’s sales performance radar for a few years now having posted consecutive quarterly sales increases and mentioned specifically during multiple financial calls, so it’s in Apple’s best interest to keep the momentum going. The country makes roughly 50 million Android phones a year mainly for the domestic market, and 85% of phone imports in 2023, or 2.3 million of them, worth around $2 billion, were iPhones. The government is keen to reduce this foreign spending by getting Apple to make phones locally.
Armed with this information and situation, the Indonesian government decided to increase pressure on the company to make good on their promise and weaponised it to force them to eventually offer an investment worth a billion dollars late last year.
Political ego meets business reality
Expecting companies to invest in Indonesia just because they’re doing well in sales ignores the realities of running a sustainable business. Sure, it’s fair to want businesses to contribute to the markets they profit from, but investments can’t be driven by sales numbers alone. They need to make sense, whether it’s about supply chains, regulations, or long-term viability. Pressuring companies to invest without considering these factors often leads to rushed, unsustainable decisions that end up costing everyone in the long run.
That said, there’s room for a balanced approach. Instead of tying investments directly to sales, Indonesia could focus on creating conditions that make investing worthwhile, like improving infrastructure, offering clear incentives, and ensuring regulatory stability. This way, companies can contribute meaningfully without being forced into decisions that don’t align with their business goals. Fair contributions are important, but they should come from partnerships built on mutual benefit, not pressure. Otherwise, it’s just a short-term fix with a long-term price tag.
Apple’s Vietnamese success
Indonesian officials and analysts love to compare Apple’s meager investment in the country with the $16 billion Apple already spent in Vietnam since 2019. The company has 26 suppliers and 28 factories in the country as of 2022 and they announced in April that they will spend much more.
Apple didn’t invest in Vietnam because the market loves the iPhone so much, they’be been investing for years and each time increasing their commitment because the government offer attractive investment opportunities and incentives, provide a stable and consistent environment for businesses, deliver the necessary labor force, and ensure long term investment and production sustainability and security despite political upheavals. Not to mention the factories are mostly located near China which allows them to maintain a streamlined supply chain operation. Indonesia doesn’t have that advantage.
Vietnamese mobile developers also took up the Apple platforms because they saw opportunities, not because they were pushed or coaxed into the platforms. They didn’t need an Apple Academy to get developers going. Most Indonesian developers and companies only see opportunities based on local sales numbers and market size. They don’t see beyond the domestic market. That’s why it was a struggle to find quality Mac and iOS apps and developers from Indonesia before the Academies opened.
By the way
The article also mentioned about the Ministry of Industries spokesperson saying that Apple submitted their investment proposal over WhatsApp. It sounds like the government wants to shame Apple for sending such an important document over a chat app but the country runs almost entirely on WhatsApp. Comms within and across government ministries and agencies are done almost exclusively on the platform, with letterhead documents for official records.
What are the chances that they sent it that way because they were told to submit the document ASAP and the paper doc would follow after, and that they haven’t managed to schedule the meeting with the Ministries because November and December are holiday months for the company? I mean, if it’s that important, Tim Cook could get a few execs to drop their holiday plans and make the meeting but it seems that the urgency of this deal has yet to reach that critical level.
AuliaSays 