Apple Prefers India For IPhone 16 Production Over Indonesia, What's The Reason?

Illustration of the iPhone 16 (photo: Apple)

JAKARTA - Recently, Apple announced its plans to build four new retail stores in India, and will start producing its own iPhone 16 in the country.

However, in contrast to India, Apple does not have an official retail shop or factory in Indonesia to sell its products directly to consumers in the country.

Why does Apple prefer India over Indonesia?

The construction of four retail stores and producing the iPhone 16 in India is due to the fast-growing manufacturing sector in India, where Apple is a key player in this development. In fact, Foxconn and Wistron are building factories in the country.

In addition, Apple also plans to reduce dependence on China as its main production center due to geopolitical tensions and the risk of supply chain disruptions due to the COVID-19 pandemic.

According to a JPMorgan report, the tech giant wants to move 25 percent of its iPhone production by 2025 to diversify its manufacturing base.

Meanwhile, one of the reasons why Apple cannot build its factory in Indonesia is constrained regulations that require companies to assemble HPs using local components.

According to the Minister of Communication and Information Budi Arie Setiadi, the presence of domestic component suppliers is a major factor in increasing Indonesia's role in the global electronic industry supply chain network.

Thus, he said, the opportunity for HP producers to open factories in Indonesia would be even greater if the number of component producers in the country also increased.

In addition, the Minister of Communication and Information also recently confirmed that Apple canceled building factories in Indonesia because the government could not fulfill their requests which were considered too heavy.

According to Budi, Apple has asked for a tax holiday or too large tax exemption, which is for 50 years, as in Vietnam. This ultimately did not allow Apple to build factories in Indonesia.

According to him, if Indonesia gives the green light to Apple to give a 50 year tax holiday, then it is possible that other foreign technology companies will also ask for the same thing.