Apple can sell iPhone 7s in Indonesia after R&D investment commitment

16 Dec, 2016 6:00 pm

JAKARTA  – Apple Inc has committed to invest around $44 million in a research and development center in Indonesia over the next three years, a senior government official said, enabling it to start selling its latest iPhone 7 in the Southeast Asian nation.

Indonesia, a promising smartphone market where Apple has trailed some rivals, has stipulated that starting from January 2017, all 4G handsets sold there must have a local content of at least 30 percent. That rule can be met in terms of hardware, software or an investment commitment.

Apple received a “local content certification” in November, I Gusti Putu Suryawirawan, director-general for metal, machines, transport equipments and electronics at the industry ministry, said in a text message.

 “Apple has committed around $44 million to invest in R&D over three years,” Suryawirawan said. “Therefore, they can distribute devices priced 6 million rupiah ($448) and above. That means all iPhones can be distributed.”


An Apple spokeswoman declined to confirm the investment figure, but pointed to an announcement last year that the U.S. tech company had committed to build an iOS App Development Center in Indonesia.

Apple has an uphill battle in the country of 250 million people, which has a young, internet-savvy demographic that is among the world’s biggest users of social media.

In the second quarter of this year, South Korea’s Samsung led with a 26 percent share of Indonesia’s smartphone market by sales volume, trailed by China’s OPPO with 19 percent, according to research firm IDC. Both Samsung and OPPO have factories in Indonesia.

Google declined to respond to Haniv’s comments. It repeated a previous statement that it has had a local company in Indonesia since 2011, has paid all applicable taxes and will cooperate fully with the government.

Indonesia is eager to ramp up tax collection to reduce its budget deficit and fund infrastructure programs.

It said in April it would check if taxes paid by the local offices of Google, Yahoo, Twitter and Facebook were sufficient.

According to Indonesian law, if Google accepted the tax office’s findings, it would not be taken to a court but would have to pay the taxes owed plus a fine equivalent to 150 percent the amount.

If Google disputed the findings and was taken to court, it could be fined up to four times the amount it owed if it lost the case. OPPO’s army of sales representatives, advertising blitz and middle-end pricing have propelled it to no. 2 in Indonesia within just three years.–Reuters

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