Made in Indonesia smartphone law could put Apple and others at a disadvantage in the country

"Made in Indonesia" smartphone law could put Apple and others at a disadvantage in the country

According to a law expected to be finalized in Indonesia next month, smartphones and tablets sold to the 250 million people living in the country must have at least 40% of its parts sourced from within the Indonesian borders. This law would take effect on January 1st, 2017. Understandably, global smartphone manufacturers like U.S. based Apple are not happy with this proposed rule. Samsung has already opened a plant in Jakarta that has been turning out locally produced handsets, but many business groups expect that the law will cause prices of handsets to rise in the country, and could prevent Indonesia from obtaining the latest technologies.

As it is, less than a third of the people in the country own a smartphone, which makes it quite an attractive market for manufacturers. Indonesia Communications Minister Rudiantara says that the law will be finalized next month and is designed so that Indonesian companies can snag more of the $4 billion in annual smartphone sales that occur in the country. The law would also support President Joko Widodo's promise to make Indonesia a nation of producers rather than consumers.

The office of the U.S. Trade Representative is said to be talking over the matter with Indonesian authorities, and the American Chamber of Congress mentioned the law in a letter to Communications Minister Rudiantara dated on February 12th. The country's smartphone manufacturing industry is only about a year old and many fear that Indonesia does not have the strong supply chain necessary for manufacturing smartphones in the country. The letter says that Indonesia could be violating international law if the rule is put into effect.

"We fear that the approach taken in this draft regulation could inadvertently restrict access to new technologies, raise the cost of ICT for Indonesian companies, stimulate grey and black markets for mobile phones, and carry other unintended consequences"-Letter from American Chamber of Congress to IndonesianCommunications Minister Rudiantara. Source