After the iPhone 16, it is the turn of the Google Pixel range to see its smartphones banned from sale in Indonesia. According to the Indonesian Ministry of Industry, Google Pixel did not comply with current regulations to be able to sell its products in the country. Jakarta believes that tech giants prefer to import their products instead of manufacturing them locally, and wants to force foreign companies to invest locally.
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From now on, smartphones banned from sale can enter the territory of theIndonesiabut on condition that they are not sold there. The Indonesian government has adopted a specific policy to encourage foreign companies to contribute to local economic and technological development. Even if it means forcing their hand.
Also, for a foreign company to operate legally in the country, it must meet the criteria for Domestic Content Rate certification. This provision, known by the acronym TKDN, requires that a certain quantity of finished products come from Indonesia, whether in the form of goods, services or a combination of the two. For mobile phones, tablets, computers or other telecommunications equipment, this ratio is at least 40%. The provisions and certifications are accessible on the Indonesian government websites.
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Boosting Indonesian production
Jakarta’s stated objective is to force foreign manufacturers to set up their factories in the country. It is not a question of establishing simple assembly sites there; some of the components must be manufactured there and found in the final product.
The leading economic power in Southeast Asia, Indonesia is also the fourth most populous country in the world with its 278 million inhabitants. Founding member of the Association of Southeast Asian Nations (Asean), the archipelago of 17,000 islands is full of natural resources such as hydrocarbons, palm oil, rubber, gold and nickel. Its economic situation remains solid.
According to the International Monetary Fund (IMF), Indonesia’s economy is expected to grow by 5 to 5.1 percent during 2024-2025. The country attracted $47 billion in foreign investment in 2023. Nearly half of these sums are invested by Chinese and South Korean companies in the mining and metallurgy sector. It is also Chinese manufacturers, such as Xiaomi, Oppo and Vivo, as well as the South Korean Samsung, who dominate the smartphone market which is loved by 100 million young Indonesian consumers.
Towards sustainable growth
Another sector is emerging: that of the production of lithium-ion batteries. The government has great ambitions to develop renewable energies such as solar, wind and geothermal energy. However, Indonesia’s effort dedicated to innovation and development of start-ups is still lower compared to its Asian neighbors like the Malaysiathere Thailand or the Vietnam.
However, the dividends from the surge in commodity prices will not last forever. So, the new president, Prabowo Subiantowill have to accelerate structural reforms to put his country on the path to sustainable growth.