Indonesia’s iPhone 16 ban will hurt consumers more than Apple

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No firm needs a ban on its merchandise. However a call by Indonesia’s authorities to dam Apple from promoting its newest iPhone 16 units in south-east Asia’s largest economic system is much from disastrous, even when the timing is unlucky.

The iPhone 16 can’t be marketed within the nation as Apple’s native unit is but to fulfil the nation’s 40 per cent native content material requirement for smartphones, the trade ministry has dominated. The federal government had stated earlier this month that Apple’s funding in Indonesia — of Rp1.5tn ($95mn) thus far — was wanting a Rp1.7tn dedication.

The federal government has been pushing a “Made in Indonesia” coverage to herald extra overseas funding by making it tougher for firms to import items.

Telecommunications merchandise require certification to be offered within the nation. At the very least 40 per cent of a product’s worth must be produced or originated in Indonesia, which incorporates domestically sourced capital items, providers and uncooked supplies. Different choices to fulfil that worth requirement embrace growing purposes domestically, or creating different modern merchandise inside the nation. Apple has chosen to start out constructing developer academies domestically.

The ban does come at an unlucky time for Apple. Gross sales of the iPhone have been rising in Indonesia, hitting a 40 per cent share of the “premium” smartphone market, which incorporates units costing greater than $600. Throughout the market, Indonesia’s smartphone unit gross sales have grown this yr, rising by a fifth within the second quarter. The take-up of 5G smartphones has been accelerating, with unit gross sales doubling throughout the interval.

Demand for the iPhone 16 has been robust in Asia, particularly in China, since its launch in September. In China, gross sales rose 20 per cent within the first three weeks after its launch in contrast with the 2023 mannequin, based on analysis agency Counterpoint.

The rapid impression on Apple’s topline needs to be put in perspective, nevertheless. Sure, Apple gross sales in Indonesia have been rising lately. However when wanting on the market as a complete, Indonesia continues to be dominated by the Android working system which accounts for 87 per cent of the whole market. Indonesia continues to be a comparatively small marketplace for Apple: iPhones account for a couple of tenth of the whole 34mn smartphones offered a yr within the nation. To place that into context, Apple offered 235mn smartphones globally final yr.

Indonesians who really need the iPhone 16 may pay excessive costs to get one by way of unofficial routes. The federal government’s ban may simply damage native shoppers greater than it helps the economic system.

june.yoon@ft.com