Indonesia has blocked Alphabet’s Google from selling its Pixel smartphones in the country, citing the devices’ failure to meet laws requiring the use of locally made components.
“We are enforcing these rules to ensure fairness for all investors in Indonesia,” Ministry of Industry spokesperson Febri Hendri Antoni Arief said late last week, according to a report by Reuters. “Since Google’s products do not comply with the requirements, they cannot be sold domestically.”
Jakarta maintains a suite of local content requirements designed to encourage the development of domestic manufacturing. Under these rules, certain smartphone handsets are required to contain at least 40 percent locally manufactured components.
The announcement comes a week after the government announced that Apple would be unable to sell its latest model of iPhone because Apple has “not fulfilled its investment commitment to earn a local content certification.” The company’s iPhone 16 phones were released worldwide in September.
While Google’s Pixel smartphones and Apple’s iPhone 16 cannot be sold in Indonesia, for the time being, Febri said that users may still purchase the models overseas, as long as they pay the necessary import taxes.
The announcements are just the latest example of Jakarta’s readiness to wield the power of the state in order to develop local industries and/or to satisfy important domestic constituencies. Among the most recent examples have been its bans on the export of raw nickel, which are designed to stimulate foreign investment in downstream processing facilities, and its restrictions on the e-commerce site Temu, whose factory-to-consumer model it fears will undermine local businesses.
As Reuters notes, international companies satisfy local content criteria “by working with Indonesian suppliers or by procuring components locally, therefore guaranteeing that some of their supply chain supports local businesses.”
Google and Apple are not leading smartphone brands in Indonesia, where consumers tend to prefer more affordable South Korean and Chinese brands. As of last month, China’s Oppo was the most popular smartphone brand in Indonesia, with a share of around 17.4 percent of the market. This was followed by South Korea’s Samsung (16.5 percent), China’s Vivo (13.5 percent), and its local rival Xiaomi (13.3 percent). Apple comes in fifth place, with a 12.8 percent market share. Google’s Pixel handsets are not yet being officially distributed in Indonesia.
Even then, being locked out of the Indonesian market, or facing significant restrictions within it, is no small thing. The country is the fourth-most populous nation in the world, and its fourth-largest mobile market, with smartphone penetration of around 91 percent this year. It is also an increasingly tech-savvy nation, which is the focus of growing investment by tech giants from across the world.
For this reason, there is a good chance that Google and Apple will find a workaround that allows them to sell their premium handsets to Indonesian buyers. As James Guild noted in these pages recently, the Indonesian government has become quite adept in leveraging access to its large consumer market to extract concessions from foreign companies. It would be no surprise to see these models for sale in Southeast Asia’s largest country in the short to medium term.