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Politics

Indonesia's 'pro-Apple' local content rule irks smartphone rivals

Policy shift means the US tech giant can meet the quota with a smaller investment

JAKARTA -- Another sudden regulatory change in Indonesia is baffling foreign companies, this time over the mandatory use of local components in fourth-generation smartphones sold domestically.

In 2015, the government said that all 4G phones sold in the country would need to contain 30% locally procured components by 2017. South Korea's Samsung Electronics and other foreign makers responded by investing in Indonesian assembly other plants to better tap the growing market.

One company that opted not to set up local production was Apple, meaning it would not be able to sell its latest models in the country when the rule took effect.

Things changed in 2016, however, when the government decided to count locally developed smartphone apps as "locally produced" content for smartphones. Sensing an opportunity, the U.S. tech giant is now set to open an app-development facility in the country. According to a source, the center will open in suburban Jakarta as early as October. The move has enabled Apple to start selling its newest phones.

The rule change has drawn the ire of other smartphone makers.

Among them is Samsung, which in 2015 established a smartphone production line inside a home-appliance factory in suburban Jakarta. Had the rule on app development come earlier, the company could have saved a lot of money by using Apple's approach.

Sudden policy shifts are not uncommon in Indonesia, which needs to maintain a pro-investment stance to prevent foreign companies from fleeing the country. 

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