Indonesia Says Apple's USD 100 Mn Investment Proposal Inadequate 

 

Indonesia said a USD 100 million investment proposal from Apple to build an accessory and component plant was not enough for the country to allow the tech giant to sell its latest iPhone model, its industry ministry said on Monday. 

 

Indonesia in November banned sales of Apple's iPhone 16 after it failed to meet requirements that smartphones sold domestically should comprise at least 40% locally-made parts. 

 

Indonesia has also banned the sale of Alphabet's Google Pixel phones over a similar lack of use of local components. 

 

Indonesian authorities last week said Apple had put forward the investment proposal to lift the sales ban. 

 

Apple did not immediately respond to a request for comment. 

 

"We have done an assessment and this (proposal) has not met principles of fairness," Industry Minister Agus Gumiwang Kartasasmita told a press conference, comparing the proposal to Apple's bigger investments in neighboring  Vietnam and Thailand. 

 

Apple has no manufacturing facilities in Indonesia, but has since 2018 set up application-developer academies, which Jakarta considers a way for the company to meet local content requirement for the sale of older iPhone models. 

 

Companies usually increase the use of domestic components to meet such rules through partnerships with local suppliers or by sourcing parts domestically. 

 

Agus said Apple had an outstanding investment commitment of USD10 million it should have carried out before 2023. He also wanted Apple to commit to new investment until 2026. 

 

The ministry would invite Apple to visit Indonesia to negotiate further, Agus said. 

 

Source: Reuters 

US Invests USD 67 Bn in Indonesia, but Local Content Rules Remain a Challenge 

 

A freshly launched report shows that American businesses have invested USD 67 billion in Indonesia over the past decade, but Jakarta’s local content rules, among others, still remain a major deterrent to US investments. 

 

Business lobbies AmCham Indonesia and the US Chamber of Commerce have just unveiled their latest bilateral investment report. US investments in Indonesia totaled USD 67 billion between 2014-2023, according to the report. The figures took into calculation upstream oil and gas investment, as well as mergers-and-acquisition activities. The investments had resulted in a USD 130 billion economic impact that goes beyond job creation. The numbers are also equivalent to the total costs needed to build 18 of the Jakarta-Bandung high-speed train projects.  

 

Despite the impressive figures, American manufacturers -- particularly those requiring components that are still unavailable locally -- find Indonesia’s domestic content rules to be troublesome. 

 

“Most companies are part of the global supply chain. If they can’t get the parts they need to manufacture their products here with the quality that they need, [the American investors] are not going to be comfortable coming and investing here,” Lydia Ruddy, the managing director of AmCham Indonesia, told the press in Jakarta on Tuesday. 

 

A freshly launched report shows that American businesses have invested USD 67 billion in Indonesia over the past decade, but Jakarta’s local content rules, among others, still remain a major deterrent to US investments. 

 

Business lobbies AmCham Indonesia and the US Chamber of Commerce have just unveiled their latest bilateral investment report. US investments in Indonesia totaled USD 67 billion between 2014-2023, according to the report. The figures took into calculation upstream oil and gas investment, as well as mergers-and-acquisition activities. The investments had resulted in a USD 130 billion economic impact that goes beyond job creation. The numbers are also equivalent to the total costs needed to build 18 of the Jakarta-Bandung high-speed train projects.  

 

Despite the impressive figures, American manufacturers -- particularly those requiring components that are still unavailable locally -- find Indonesia’s domestic content rules to be troublesome. 

 

“Most companies are part of the global supply chain. If they can’t get the parts they need to manufacture their products here with the quality that they need, [the American investors] are not going to be comfortable coming and investing here,” Lydia Ruddy, the managing director of AmCham Indonesia, told the press in Jakarta on Tuesday. 

 

Source: Jakarta Globe 

Airfares to Drop 10% for Year-End Holidays, Govt Promises  

 

Coordinating Infrastructure and Regional Development Minister Agus Harimurti Yudhoyono said that, over the past two weeks, the Transportation Ministry, PT Angkasa Pura, Pertamina and domestic airlines had been collaborating to make air travel more affordable. 

 

The government says airfares will drop by 10 percent ahead of the Christmas and New Year holidays.   

 

Coordinating Infrastructure and Regional Development Minister Agus Harimurti Yudhoyono said that, over the past two weeks, the Transportation Ministry, state-owned airport operator PT Angkasa Pura, state-owned oil and gas company Pertamina and domestic airlines had been collaborating to make air travel more affordable.  

 

“The reduction in flight ticket prices aims to help our people and stimulate the economy, including tourism,” Agus said in a press release on Tuesday. 

 

He added that the 10 percent airfare cut was achieved through three key government measures, namely a 50-percent cut in airport service fees, a 5.3-percent reduction in the price of aviation turbine fuel (avtur) from the previous month and an 8-percent cut in the fuel surcharge for jet engines.  

 

These measures are expected to reduce airfares by 9.9 percent, equivalent to an average saving of IDR 157,500 [USD 9.92] per ticket. It will also favor all categories of passengers, from full-service to no-frills, with the overall estimated savings amounting to IDR 472.5 billion during the upcoming holiday season.  

 

“We hope this [initiative] is good news for people and families planning year-end vacations. Hopefully this can also stimulate our creative economy,” Agus concluded.   

 

The cost-cutting measures are set to be rolled out at 19 major airports in Indonesia from Dec. 19 to Jan. 3, 2025. 

 

In late October, the ministries of state-owned enterprises (SOEs), tourism and transportation formed a joint task force to boost the tourist sector through steps that included bringing down domestic airfares.  

 

The task force was set to start working within two weeks to attract more foreign and domestic tourists through a variety of measures, including harmonizing regulations, according to SOEs Minister Erick Thohir.  

 

Days after the announcement of the task force, the Finance Ministry issued a regulation eliminating taxes on imported spare parts for airplanes to cut maintenance costs and reduce high domestic airfares.  

 

Under Finance Ministry Regulation No. 81/2024 on taxation rules, airplane spare parts, as well as aviation safety components, are among 19 items freed from taxes starting January next year.   

 

The country has long sought to lower airfares amid persisting issues, such as fuel costs, spare parts, permits, value added tax and passenger tax.  

 

In July, a task force was also established under the administration of then-president Joko “Jokowi” Widodo, comprising the Office of the Coordinating Economic Minister and what was then the office of the coordinating investment and maritime affairs minister, along with other ministries and institutions.   

 

At the time, Sandiaga Uno, then-tourism and creative economy minister, said the task force had been formed to achieve a breakthrough in assessing airline ticket prices and cutting them by 10 percent before Jokowi’s term ended on Oct. 20.   

 

“If we can implement quick wins, which could take two to three months, and before October, before the end of [the Jokowi] administration, ticket prices could drop,” Sandiaga told the press on July 22. 

 

However, that goal was not realized before Jokowi’s term ended. 

 

Source: The Jakarta Post