Indonesian nationalism bites into Apple

Jakarta: Apple is battling to gain a foothold in Indonesia after nationalistic regulations hit the US tech giant’s efforts to compete in the booming emerging market against Samsung and other rivals.

The iPhone 6S and 7 are yet to be released in SouthEast Asia’s top economy as Apple struggles to fulfil requirements that phone makers must have 20% “local content” for 4G handsets sold in the country.

South Korea’s Samsung has been able to meet the demands and gain a share of the market in Indonesia – a country of 255 million people, with an army of young consumers – over 25 times bigger than Apple.

Officials say the regulations that came into force this year aim to support the growth of the local manufacturing industry, which lags behind its Asian peers, and plan to raise the local content requirement to 30% at the start of next year.

But to critics, it is just the latest example of misguided nationalistic rules that hamper rather than help business in Indonesia, which is ranked 109th on the World Bank’s ease of doing business index.

“The new rules force companies to rethink the entire supply chain and that is expensive for them to do,” Sudev Bangah of International Data Corporation, a consumer technology market research firm, said.

Apple has encountered problems in other emerging markets, notably India, where the Silicon Valley giant is facing roadblocks in its quest to open stores instead of selling products through thirdparty retailers.

In Indonesia, meeting the local content rules has been easier for Samsung as it already has factories in the country.

But Apple, which makes most of its handsets in China, has not yet met the requirements. Its iPhone 6S was never released in Indonesia, while the 7 seems unlikely to hit the country’s shops any time soon. — AFP

The new rules force companies to rethink the entire supply chain and that is expensive for them to do. Sudev Bangah