By Kimberley Kao

Apple has reached an investment agreement with Indonesia after protracted negotiations, which should clear the way for the sale of iPhone 16 handsets in Southeast Asia's largest economy.

Industry Minister Agus Gumiwang Kartasasmita said in a media briefing on Wednesday in Jakarta that Apple's investment plan for the 2025-2028 period has been approved, according to a release posted on the ministry's website.

He added that the ministry will proceed to issue the license Apple needs to sell iPhone 16s in the country.

Apple agreed to increase its investments in Indonesia, including committing to establish a research and development center focused on software development, the ministry said.

Apple supplier Luxshare will invest $150 million at a facility in Batam that will manufacture accessories for AirTag tracking devices, the ministry said.

Additionally, Apple has committed to sourcing AirTag battery components from Indonesian manufacturers, and is also preparing a production line in Bandung to manufacture mesh fabric for AirPods Max, the ministry said.

Apple will also bring in $160 million in fresh cash investments.

Apple and Luxshare didn't immediately reply to a request for comment.

The sale of Apple's latest iPhone 16 handsets had been banned since October over what officials characterized as the company's nonfulfillment of local investment requirements. Apple executives had visited Indonesia in January to continue discussions to lift the ban.

The industry ministry had said a previous proposal by Apple to build a factory to produce AirTag products in Batam wasn't sufficient to fulfill requirements related to a policy aimed at supporting domestic industries and reducing dependence on imported products.

Under the policy, companies have to meet set requirements for using goods or services sourced from within Indonesia. This can be done via various means, including manufacturing products, building factories or developing innovations domestically.

The cellphone market in Southeast Asia's largest economy is a lucrative one, benefiting from a large, growing population with rising disposable incomes.

There are an estimated 354 million devices in active use in Indonesia, according to the ministry. That compares with a national population of about 270 million, according to World Bank estimates.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

February 26, 2025 23:52 ET (04:52 GMT)

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