"Made in Indonesia" smartphone law could put Apple and others at a disadvantage in the country

According to a law expected to be finalized in Indonesia next month, smartphones and tablets sold to the 250 million people living in the country must have at least 40% of its parts sourced from within the Indonesian borders. This law would take effect on January 1st, 2017. Understandably, global smartphone manufacturers like U.S. based Apple are not happy with this proposed rule. Samsung has already opened a plant in Jakarta that has been turning out locally produced handsets, but many business groups expect that the law will cause prices of handsets to rise in the country, and could prevent Indonesia from obtaining the latest technologies.

As it is, less than a third of the people in the country own a smartphone, which makes it quite an attractive market for manufacturers. Indonesia Communications Minister Rudiantara says that the law will be finalized next month and is designed so that Indonesian companies can snag more of the $4 billion in annual smartphone sales that occur in the country. The law would also support President Joko Widodo's promise to make Indonesia a nation of producers rather than consumers.

The office of the U.S. Trade Representative is said to be talking over the matter with Indonesian authorities, and the American Chamber of Congress mentioned the law in a letter to Communications Minister Rudiantara dated on February 12th. The country's smartphone manufacturing industry is only about a year old and many fear that Indonesia does not have the strong supply chain necessary for manufacturing smartphones in the country. The letter says that Indonesia could be violating international law if the rule is put into effect.


source: Reuters

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46 Comments

1. Dingy_cellar_dweller

Posts: 339; Member since: Mar 16, 2013

Apple's not happy, lol. Just buy the country and be done with it or risk other countries following suit.

3. dimas

Posts: 3446; Member since: Jul 22, 2014

If I am a big phone manufacturer, I'd say ignore Indonesia for their stupid laws and just concentrate selling to other countries.

7. sriuslywtf

Posts: 297; Member since: Jul 09, 2013

One does not simply ignore 250 million people... This is a threat to all manufacturers since this means they need to either put a plant there or outsource their materials there. Imagine the overheads in cost. This too could be a trend to other third world countries and that's why OEM will not be happy. Simply put, if Indonesia can do this, why not others too?

8. HugoBarraCyanogenmod

Posts: 1412; Member since: Jul 06, 2014

Businessman can easily ignore this 250 million beggars who can't even feed themselves Indonesia has high population, so what, purchasing power still low. Baggers can't be choosers, I don't think Apple will feed the troll

10. willytbk

Posts: 252; Member since: Aug 15, 2012

Have you been there before ? or just blantantly comment about the country based on the news you saw on TV occasionally ? looks like you are so narrowminded. Don't forget your HugoBarra keeps mentioning that country whenever he was asked about expansion and country focus. If they are so small and full of 250 million beggars, i don't think the US Trade Representative even bother to meet and talk with Indonesian authorities. but they did.

15. aaronix

Posts: 17; Member since: Jun 05, 2014

ha ha ha ha who is beggars ? i am malaysian, in malaysia iphone 6 plus 16gb cost RM1799 but in US it cost only +-USD700. We still buy it without any complaint. Same goes to other Mobile Phones. Buying USD 50 mouse is big things in there but in malaysia we bought same mouse for RM300. My point is we earn in RM 36K annually but we still can buy expensive thing. Ignore currency conversion, you earn more and getting things cheaper but us earn less but gettimg expensive things. Stop call third world country citizens beggars.

43. BuckeyeCadet86

Posts: 78; Member since: Oct 26, 2011

First - ignore conversion - because you are actually getting the iphone 6+ for less than $500 USD if you are correct in your quote of 1799 Ringgits. As for you paying higher costs, get over it. That is business, it costs more to ship a relatively (in the global sense) few number of units to a country than it does to bulk ship millions to the US, China, Europe, or Korea. Citizens from developing nations have every right to enact laws like this, they aren't beggars, but they are stupid. In the short term they may boost their local industries (even though Indonesia has no local smartphone industry) but in the long term it will seriously hurt Indonesia. The larger companies will continue to innovate, technology will be cheaper for them due to scaling and they will simply ignore the market. If they can't get the profit margins they want they SHOULD ignore the market. Congrats Indonesia, you will be repealing this law by 2020 when you realize that most smartphone manufacturers just won't play ball, and they don't have to.

46. sumemaster

Posts: 1; Member since: Feb 25, 2015

eventhough indonesia has no local smartphone industry? googling first lads

14. aaronix

Posts: 17; Member since: Jun 05, 2014

ha ha ha ha

25. sonisoe

Posts: 440; Member since: May 06, 2009

ooooo, you have no idea how dependent the US is on Indonesia despite it still being an emerging market... do google the country before making a comment...

29. androidwindows

Posts: 216; Member since: Oct 04, 2014

The irony is you are from China, a country with the BIGGEST number of beggars in the universe... LOL...

31. Ashoaib

Posts: 3309; Member since: Nov 15, 2013

250 millions are beggars? So number one beggar has 1.33 billion beggars and number second has 1.22 billion beggars? Is this what you imply?

44. refillable

Posts: 1071; Member since: Mar 10, 2014

Is this a joke? I am actually from Indonesia, and I can assure that your statement is a childish joke. I am not offended by anyway, but I'm laughing on how unfunny it is. There is a difference between blatantly wrong assumption (like yours) and assumption that are based on facts. Sales of smartphones in the country is actually strong and increasing. I'm sure this will threat a lot of smartphone companies... Just watch.

12. sipha

Posts: 440; Member since: May 12, 2012

Remember Apple ignored 750 million China Mobile subscribers for all those years, they will definitely ignore Indonesia as well...it really would set a bad precedent and honestly ain't worth the hustle!!!

20. Diezparda

Posts: 941; Member since: Oct 23, 2013

you underestimate southeast asian market, especially Indonesia & Singapore are highly prospective market.

2. dimas

Posts: 3446; Member since: Jul 22, 2014

I never thought Indonesian government could be this greedy and idiot. The reason gadgets today become affordable is because China open their doors to foreigners willing to invest in their country without demanding too much on patriotic attachments. If Indonesia will insist that manufacturers establish assembly in their country without proper business incentives, gadget prices will skyrocket to adjust for new expenses. Indonesia is making the mistake of Japan in the early 90s. Embrace globalization Indonesia, eccentricity will kill your country's progress.

30. androidwindows

Posts: 216; Member since: Oct 04, 2014

Are you Indonesian? Your name sounds Indonesian.

45. refillable

Posts: 1071; Member since: Mar 10, 2014

I don't think 40% is too much. I believe PCB, chassis and some materials can drive the economy towards the plus side. Time will tell though.

4. TypicalGeek

Posts: 220; Member since: Feb 19, 2015

Why what made sense then doesn't make sense anymore to Indonesia? SMH.

5. AmirBudi

Posts: 88; Member since: Mar 21, 2014

As Indonesian, I can buy the next iPhone 7 at Singapore which is only one hour flight from Jakarta, and the total cost is still cheaper.

6. TypicalGeek

Posts: 220; Member since: Feb 19, 2015

I'm originated from Cambodia, and phones there are cheaper than the same ones in the US (unlocked, off contract) except the damn iPhone.

11. willytbk

Posts: 252; Member since: Aug 15, 2012

can't comment much about the law. but some people commented that Indonesia is a country full of 250 beggars. so narrowminded. apparently a lot of indonesian fly to Singapore just to buy an iPhone (me included).

9. sip1995

Posts: 1771; Member since: Feb 07, 2014

Microsoft should make a department in Indonesia now...

13. Chrisyahya

Posts: 59; Member since: Apr 28, 2014

i'm very proud being indonesian citizen. but first pardon my english. y'know indonesian people doesnt talk english perfectly lol. i'm very agreed indonesian is "anti foreign", and the new law will help us stay away from new technologies. indonesian people are 80% technophobe, so they think they didnt need any new technologies because our current technology is enough lol being an indonesian students, majority students use iPhone, and they DIDNT know how to fully use their iphone, all they know is only : Selfies! upload them to Path!!! lets "GALAU-ing"! who need a phone with too much feature but we didnt know how to use it, right? lol. yes, not iphone too--android, so many students who has android phones complains about his/her phone, "why is so laggy?" "first time i bought it so smooth, but now so laggy, iPhone 4s still better than this" " whats android lolipop? a brand new lollipop candy?" in my class, i only found 1 friend who can know what feature on his phone. the mindset has been set : "the more expensive it's price, surely has good quality, good innovations, and we must buy it" ah, indonesia has a motto : "bhinneka tunggal ika" meaning : berbeda tapi satu (different but in one unite) (lmao fail english, i hope u understand ) but sadly it didnt do with citizens. so many racist case (example : ahok is a first chinese governor, and being hated by muslim fanatics like FPI (front pembela islam) and sadly some citizen is very supporting the sadistic regime, called ISIS. ah back to topic, so if the new law has launched, surely microsoft nokia, sony, apple, samsung, One Plus, HTC and much more except OPPO (OPPO has agreed to make new factory in indonesia) will kicked out from indonesia, and then we can only buy local cheap quality phones with terrible performance. again, sorry for my very bad english.

16. sip1995

Posts: 1771; Member since: Feb 07, 2014

I don't know why, but I think Microsoft will make a factory too, they have to...

17. sip1995

Posts: 1771; Member since: Feb 07, 2014

btw I really sorry for people who support the facking stupid Isis....

21. Obie-Wan

Posts: 113; Member since: May 24, 2012

I suggest u to really think before u comment. i'm an indonesian too. So i feel that i have to keep things straight regarding to ur comment. Yes there is a fact in ur comment, like the average people ( mostly students), only use devices like iPhones mainly just for style n other not so important things. But its all not that bad in here. Saves for our country internal problems and governmental decisions, every country has their own problems too. I think its better not to whine like so many of us usualy do. It'll be better if we keeps our problems to ourselves, instead we should try to do our best to make things better here. As a wise man might say, someone else problem is an advantage for others. As for the other readers u should do some researchs before spouting some ignorant comment. Dont talk about a thing if u know nothin. Peace y'all. V

18. iammctrevor

Posts: 1; Member since: Feb 24, 2015

Hello, im from Indonesia. Sorry if my english bad. I want to remind that the news miss one important thing, the regulations about the product must have at least 40% of its parts sourced from within the Indonesian borders is only for Smartphone or other mobile devices with 4G LTE technolgy support. And this is our nation rules, you can take it if you want or go if you dont. Every nation have their rules. The Stupid Mind coming when they try to connect this case (bussiness) to other case like racism, religion, and others.

19. aksa123

Posts: 368; Member since: Jan 30, 2014

Well, well, this is what we call protectionism...

22. kurama.

Posts: 85; Member since: Sep 13, 2014

Good move those greedy companies especially apple is squeezing money from common people . Nice move and even if apple ignores Indonesia the world won't end iPhone is just a ripoff anyway a smartphone half it's price can do better. I hope other countries make laws like this too.

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