Apple, BlackBerry smartphones to be ‘made' in Indonesia

JAKARTA (The Jakarta Post/ANN) - Apple and BlackBerry will start production in Indonesia to comply with a government regulation that requires 20 per cent minimum local content in the hardware of smartphones to be able to enter local market.

Apple may soon begin making smartphones in Indonesia by establishing three software development centres worth $48 million in three years, enabling it to revive shipments into the country after a year-long hiatus.

Since the iPhone 6S — and now the iPhone 7 — Apple has not been able to ship smartphones into Indonesia because of a regulation requiring them to be locally made. Still, the blackmarket flourishes as unofficial resellers trade online and at local electronics centres.

But soon enough, the US technology behemoth may be able to re-boot official sales in Indonesia as Apple seeks to develop its smartphone software in Indonesia through iOS app development centres in compliance with the so-called minimum local content regulation, said I Gusti Putu Suryawirawan, the Industry Ministry’s director general for metals, machinery, transportation equipment and electronics.

Canadian smartphone brand BlackBerry, whose software licence was recently purchased by local smartphone distributor Tiphone Mobile Indonesia, had also applied for a licence to produce locally, he added.

“The ‘innovation centres’ will help the software industry grow and provide opportunities to local talent to develop apps that can be enjoyed by our nation,” Suryawirawan told The Jakarta Post in an interview. “We have plenty of app developers who now work overseas because they can’t find opportunities in their home country.”

An existing regulation requires 20 per cent minimum local content in the hardware of smartphones priced at 6 million rupiah ($460) or above. Starting in 2017, the minimum requirement will be raised to 30 per cent for the hardware or software components of smartphones sold in the domestic market, according to Industry Ministry Regulation No. 65/2016 released in July.

This protectionist rule is aimed at making Indonesia a production base instead of just a market for sales. A rapidly emerging middle class has generated considerable demand for smartphones, many of which were previously imported, putting pressure on the nation’s trade balance. It is estimated that a third of the country’s population of 250 million people has a smartphone.

“Indonesia is a big country with 250 million people. Investors will rush to come in here. Don’t let them flow in without offering any benefits to the people of the nation,” Suryawirawan said.

Apple confirmed the new commitment to build an iOS app development centre in Indonesia. The centre will be the first of its kind in Asia. However, an Apple spokesperson declined to comment on details related to the planned investments.

BlackBerry’s local partner Tiphone Mobile also confirmed the plan to develop innovation centres in Indonesia, but stopped short of giving details.

“Apparently, now if we want to make products we need to have innovation centres in Indonesia,” Tiphone Mobile Corporate Secretary Semuel Kurniawan said.

The effort to boost local content in gadgets is in line with President Joko “Jokowi” Widodo’s vision of creating 1,000 techno-entrepreneurs by 2019 to turn the country into a digital powerhouse.

So far, 17 firms have complied with the local content requirement for hardware, including South Korea’s Samsung, China’s Lenovo, as well as Indonesia’s Advan, Evercoss and Smartfren. The volume of imported cell phones fell to 33 million units last year from 57.7 million in 2014, which the government attributes to the local content rule.

“We’ll still keep the hardware scheme because this year, our local content is already more than 20 per cent and next year it will be more than 30 per cent,” said Samsung Electronics representative Lee Kang Hyun. The firm’s factory in Cikarang, West Java, employs 3,000 workers to assemble 1.5 million phones every year.

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