Jakarta is rethinking local content rules that have long frustrated global tech giants. The government now faces pressure to keep investment flowing while navigating US trade sensitivities.
Indonesia’s tech policy just blinked. After years of strict local content requirements that blocked or delayed popular devices like Apple’s iPhone 16 and Google’s Pixel phones, the government is considering a major pivot. And it’s not just about smartphones — this move signals a broader recalibration of how Indonesia plays in the global tech arena, with Washington watching closely.
Coordinating Minister for Economic Affairs Airlangga Hartarto dropped the news on April 14, hinting that Indonesia is ready to trim non-tariff barriers. This could unlock long-stalled tech rollouts and reset strained relationships with the US, especially with trade tensions still simmering.
A Rule That Kept the iPhone on Hold
The iPhone 16 officially went on sale in Indonesia on April 11, but it wasn’t a smooth road to get there.
In late 2024, Apple found itself at odds with a decades-old regulation that demands foreign tech companies meet a specific threshold of “local content” to sell their products in Indonesia. For Apple, that meant proving it had invested enough — whether through R&D, manufacturing partnerships, or training programs — on Indonesian soil.
Google’s Pixel line didn’t even get that far.
For years, Pixel devices have been absent from Indonesian shelves entirely, largely due to this policy. And while Apple eventually struck a deal with the Industry Ministry to move forward with sales, the broader issue remains unresolved.
One sentence, but it says a lot: Indonesia’s local content rule might be doing more harm than good.
Why Jakarta Might Be Ready to Bend
So, what’s changed? Short answer: politics, trade pressure, and a shifting tech landscape.
Airlangga Hartarto pointed to Indonesia’s ballooning trade surplus with the United States — US$17 billion last year alone — as a flashing red light. With Donald Trump now back in the Oval Office and wielding tariffs like a sledgehammer, Jakarta is trying to avoid being next on the target list.
Softening non-tariff barriers could help.
Here’s what’s likely pushing the government’s hand:
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US scrutiny: The White House is watching Indonesia’s trade policies more closely, especially with a widening deficit.
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Investment anxiety: Tech investors are growing wary of market barriers.
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Consumer frustration: Indonesians want global devices on launch day, not months later.
Basically, Jakarta needs to make itself a friendlier place to do business without looking like it’s giving up control.
What the Local Content Policy Actually Says
The policy, known formally as TKDN (Tingkat Komponen Dalam Negeri), isn’t unique to Indonesia — but it’s strict.
For smartphones, it requires a minimum of 35% local content. That can be met through physical manufacturing, software development, or corporate investment.
Here’s a simple breakdown of how companies can comply:
| Compliance Route | Examples | Weight Toward TKDN |
|---|---|---|
| Hardware | Assembly plants, component sourcing | High |
| Software | Local app development, services | Medium |
| Investment | R&D centers, training programs | Medium |
| Partnerships | University tie-ups, local suppliers | Low–Medium |
Companies like Apple have had to navigate all four to get the green light. But critics say the rule hasn’t necessarily helped Indonesian tech grow — and might be pushing away the very companies that could help build it.
Google, Still Locked Out
Unlike Apple, which ultimately made enough promises to satisfy the ministry, Google has held its ground. No Pixels. No concessions. Just silence.
The Pixel’s absence from Indonesia has confused many, especially given the country’s young, tech-savvy population. But it boils down to business math: Google doesn’t see a return on the investment required to meet TKDN rules.
That’s a lost opportunity — for both sides.
One official from the Communications Ministry, speaking off-record, admitted the government “wants Google here” but hasn’t yet “found the right formula.”
Can Indonesia Loosen Rules Without Losing Face?
Indonesia doesn’t want to appear weak. The local content rule was introduced with good intentions — to boost local industry and reduce dependence on imports. Walking it back too far could upset domestic players and nationalists alike.
But being too rigid could hurt more.
One policy advisor told Focus Taiwan that easing up on TKDN doesn’t mean scrapping it. Instead, the government may adjust how contributions are measured. For instance, giving more weight to training and software investment rather than just factory output.
“This isn’t about surrendering,” the advisor said. “It’s about recalibrating.”
That word keeps popping up — recalibrate. Not reverse.
What’s Next for the Tech Scene?
With iPhone 16 finally in stores, the pressure is on to show that Indonesia remains open to innovation — and global business.
Possible outcomes on the table:
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A revised TKDN formula that better reflects modern tech investment.
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Negotiated waivers for certain categories of high-demand consumer electronics.
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Bilateral talks with US trade officials to avoid new tariffs.
It’s also possible we’ll see Indonesia use this moment to attract new partners. A more flexible policy could open doors for companies like Xiaomi, Samsung, or even new US startups looking to enter Southeast Asia.
