Regarding Apple Investment, the Government is Still Formulating the Right Form of Incentive

Budi explained that Apple does not assemble its own products. According to him, the destination countries targeted by Apple's manufacturing partners are willing to provide large incentives. In fact, some are willing to provide a tax holiday for 50 years.

"We want to be on par with other countries that offer incentives to Apple and its manufacturing partners, but we also consider that the incentives given should not burden the country (Indonesia)," said Budi.

Budi stated that in the upcoming government era, it is ensured that the digital industry remains one of the main programs in order to achieve the equality of internet infrastructure and electronic-based government systems. The mobile manufacturing industry is also expected to grow so that consumer prices do not become too expensive.

Also read: Apple CEO Meets President Jokowi, Indonesia Pushes for Addition of Apple Academy

Previously, Luhut Binsar Pandjaitan, via his Instagram account, Thursday (18/4/2024), said that he accompanied President Jokowi in a meeting with Apple CEO Tim Cook at the Presidential Palace, Jakarta, Wednesday (17/4/2024). One of the results of the meeting was appointing Luhut as a representative from Indonesia to oversee Apple investments.

"The President (Jokowi) ordered me to immediately respond to their plans to invest quite a large amount in Indonesia. He (Tim Cook) is very interested in the Indonesian Capital City (IKN), that's also interesting. "He said, we (Apple) want to invest, especially in the field of artificial intelligence in IKN," he said.

Luhut elaborated on several promising economic aspects in Indonesia as a gateway for Apple investment, such as a population of 282 million people, stable economic growth, good macroeconomic aspects, and stable inflation.

"We are talking about the President's desire to see Apple's manufacturing products in this country, and that is something we will consider," said Tim Cook after the meeting (Kompas.id, 17/4/2024).

Supply chain

When contacted separately, Adi Indrayanto, a lecturer at the School of Electrical Engineering and Informatics at Bandung Institute of Technology (ITB), stated that Apple has a long supply chain of components from countries in Asia or the United States. The assembly of Apple devices is not done by Apple itself. It is Foxconn Technology Group (Foxconn) that is known as Apple's manufacturing partner.

"Foxconn has already visited Indonesia three times, even before Tim Cook's visit. The Indonesian government should intensify efforts to invite Foxconn for investment if they want to have an Apple manufacturing plant in Indonesia," he said.

Apart from Foxconn, the government can also attract Apple product component supplier companies to invest in Indonesia. However, before reaching that stage, Adi assessed that the government needs to evaluate why the repeated arrival of Foxconn has not yet resulted in any agreement.

Furthermore, he added, the Indonesian government needs to map out what device components can actually be produced domestically. Based on his observations, chargers can actually be made in Indonesia.

Also read: Tim Cook: Apple is considering building a manufacturing factory in Indonesia

India, as one of Apple's target countries to expand its production, has a population of more than 1.4 billion people. There, many middle-class consumers seek premium products. Adi also stated that the Indian government has a policy to encourage the growth of domestic manufacturing industries and reduce import costs. This is suspected to be the reason why Apple is interested in investing there.

"Don't forget that there are also political and economic issues behind Apple's business movements. The relationship between the United States and China, for example. What is the Indonesian government's stance on that issue," said Adi.

Quoting Nikkei Asia, Apple has deepened its relationship with China, even as Apple continues to expand its production in Southeast Asia and India. Based on analysis conducted by Nikkei Asia on Apple's latest official supplier list, it was found that Apple increased the number of suppliers with headquarters and manufacturing plants in China in 2023, while using fewer suppliers from Taiwan, the United States, Japan, and South Korea.

Suppliers from China have formed the largest group of Apple's specialized suppliers since 2020. There are currently 52 suppliers, up from 48 in 2022. The number of Apple manufacturing or development facilities in China, including those owned by domestic and foreign companies, has grown rapidly from 10 facilities to 286 facilities.

A closer relationship with China occurred when Apple also accelerated its supply chain transition to Southeast Asia amid the ongoing US-China technology war.

The number of Apple suppliers operating in Vietnam rose 40 percent from last year to 35 suppliers, while the number of Apple suppliers in Thailand grew by about a third to 24 suppliers. The number of suppliers in India remained at 14, with local conglomerate Tata Group ranking among the top suppliers.

Also read: Without the Domestic Component Industry, Apple's Assembly Factory Will Be Vain

However, the increase in the number of Apple suppliers in India and Southeast Asia does not necessarily mean a reduction in Apple's dependence on China. Analysis by Nikkei Asia shows that around 37 percent of the 35 suppliers in Vietnam come from China and Hong Kong, including AirPods Luxshare and Goertek assemblers, as well as iPad assembler BYD. Taiwanese suppliers maintain their status as the second largest group in Apple's supply chain, followed by suppliers from the United States, Japan, and South Korea.

Apple's strategy is different from similar companies in America, such as Dell, which've stopped using all chips and components made in China. Meanwhile, HP is also known to have requested suppliers to increase component capacity in Southeast Asia and Mexico.

Technology analyst from IDC, Annabelle Hsu, believes that China still has the most complete supply chain in the world for personal computers, laptops, and smartphones. China remains the main supplier of components and spare parts for laptops and smartphones.

Also read: Indonesia Needs to Learn from Vietnam to Enter Apple's Supply Chain