17 February 2020 (closed)
USD/IDR (13,777) +42.00 +0.31%
EUR/IDR (14,865) +32.28 +0.22%
Jakarta Composite Index (5,867.52) +0.58 +0.01%
Indonesian Communication & Information Minister Rudiantara informed on Wednesday (02/11) that American multinational technology company Apple Inc. - famous for designing, developing, and selling consumer electronics, computer software, and online services - will start building its second-biggest research and development facility in Indonesia somewhere in 2017. Although Apple has not commented on the news, Rudiantara confirmed that he had met several representatives from both Apple's Asia Pacific office and the US headquarters.
Apple is particularly known for its iPhone smartphone series. Due to Communication and Information Ministry Regulation No. 27/2015 on the Technical Requirements for Long Term Evolution Technology Standard Based Telecommunication Tool and Equipment, all smartphone producers in Indonesia - if they sell their output locally - need to comply with the higher minimum local content requirement that is stipulated by above-mentioned regulation. Starting from 1 January 2017 products within the 4G LTE spectrum, which includes smartphones, that are sold on the Indonesian market need to have (at least) 30 percent local content - both in hardware and software.
It is assumed Apple is eager to develop a research and development facility in Indonesia to meet this requirement. Rudiantara said California-based Apple may build several facilities across the Archipelago. He added that Apple's Asia Pacific is now searching for the best location, both in and outside Jakarta.
This Indonesian facility would become the company's second-largest facility outside the USA (after its facility in Brazil).
Currently, only 38 percent of the Indonesian population owns a smartphone. However, swift growth is expected. According to the latest report from eMarketer, the number of smartphone users in Indonesia will rise from 55 million in 2015 to 92 million in 2019. Meanwhile, there are currently 132.7 million Internet users in Indonesia, or approximately 51.8 percent of the total population. Low smartphone and Internet penetration imply that there is ample room for growth in the market of Indonesia.
Apple is the world's largest information technology (IT) company in terms of revenue and the world's largest technology company in terms of total assets. Therefore, it would give some shine to Indonesia's investment climate if such a big company decides to establish one of its largest facilities in Indonesia.
Indonesia is clearly on the rise in IT engineering and it now has global appeal as exemplified by the decision of Apple. I believe it will be the next Asian tech powerhouse. I wrote a blog post exactly on this dynamics, making the case that not only large companies like Apple are to benefit from the rise of Indonesia, but also the startup ecosystems in Asia and beyond. You guys may want to read it:
Olivier, co-founder of Devcity.io