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Senior Fellow at Indonesian Policy Studies Cautions Governments Against Strongarming Companies Like Apple for Investments, Warning ‘It Can Be a Dangerous Game to Play’

Senior Fellow at Indonesian Policy Studies Cautions Governments Against Strongarming Companies Like Apple for Investments, Warning ‘It Can Be a Dangerous Game to Play’

Apple is reportedly set to invest $1 billion in Indonesia. This strategic move appears to be motivated by the company’s desire to have the ongoing ban on the iPhone 16 reversed. However, there is growing concern that the negotiation tactics employed might have frustrated the tech giant. A senior fellow from the Center for Indonesian Policy Studies has raised alarms about the risks associated with coercive tactics aimed at compelling companies to invest, highlighting that such methods could lead to unintended negative consequences.

Competitive Landscape: Other Countries Eager to Host Apple’s Factories

In light of recent trade tensions and supply chain upheavals triggered by the Trump administration’s policies towards China, Apple has been actively seeking to diversify its manufacturing footprint. This transition involves establishing production facilities in alternative locations, including India and Vietnam, where governments have extended generous offers to attract Apple’s investments. These countries stand to benefit significantly from job creation and strengthened economic foundations by welcoming such a prominent player in the tech industry.

Contrarily, Indonesia has adopted a more rigid stance during negotiations. The Indonesian government reportedly turned down Apple’s preliminary investment offers of $10 million and $100 million, insisting on higher contributions before lifting the iPhone 16 ban. Despite shipping only 2.9 million iPhones in Indonesia last year—a figure that pales in comparison to its global sales trajectory—Apple is in a position where it could afford to walk away from this market contention.

However, market speculation suggests that the rationale behind Apple’s heightened investment commitment may not solely stem from the fear of the iPhone 16 ban. Krisna Gupta points out that playing tough during negotiations may be ill-advised, as such lucrative investment opportunities are rare. Indonesia’s Minister of Investment, Rosan Roeslan, emphasized the need for equitable benefits, including job creation, stressing that the shift of the ‘global value chain’ is crucial for the country’s economic ambitions.

Given the current economic landscape, Indonesia must be cautious. The nation has recently experienced significant industrial losses, including the closure of numerous footwear and textile factories, leading to mass layoffs. Meanwhile, countries like Vietnam and India continue to entice Apple with attractive incentives such as tax breaks and rapid regulatory approvals, enabling the tech company to source components from a wide array of global suppliers. Gupta indicates that these advantages could lead to Vietnam securing a more substantial $15 billion investment from Apple, despite its smaller local market compared to Indonesia. This situation suggests that Indonesia may have narrowly avoided a significant financial opportunity due to its rigid approach.

News Source: Bloomberg

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