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The Spokesperson For The Ministry Of Industry Stated That The Investment For Apple's AirTag Factory In Batam May Not Reach USD 1 Billion

Apple plans to build a factory in Batam to produce AirTags, an iPhone accessory, with an investment of USD 1 billion. The factory is expected to supply about 60 percent of the global AirTag demand and start production in 2026. This production facility is estimated to create around 2,000 jobs.

According to our technical assessment, the actual investment value for Apple’s AirTag factory in Batam is only USD 200 million. This amount is significantly lower than the USD 1 billion investment figure Apple presented to us,” said Febri Hendri Antoni Arif, spokesperson for the Ministry of Industry, in Jakarta on Wednesday (January 22).

The Ministry of Industry's technical calculations indicate that export value projections and raw material purchase costs cannot be included as capital expenditure (capex) investments. The investment value is measured solely from capex, which includes land, buildings, and machinery/technology. By including export value projections and raw material purchases in their investment, Apple seems to inflate the investment value to USD 1 billion, while the real figure is only USD 200 million.

“If Apple’s investment of USD 1 billion were truly for capex, such as land, buildings, and machinery/technology, it would be even better. Just imagine the number of jobs that could be created with a USD 1 billion investment; it would be substantial,” Febri commented.

He explained that during negotiations on January 7, 2025, Apple asked if export value projections and raw material purchases were included in capex. The Ministry of Industry's negotiation team firmly stated that these two variables are not part of capex. Capex is measured using three variables: land purchase, buildings, and production machinery/technology.

Apple's Sanctions

Meanwhile, Apple's investments from 2020 to 2023 have not fully complied with Regulation No. 29 of 2017, which allows Apple to sell its products in Indonesia. Apple has acknowledged that it still owes a commitment of USD 10 million for the 2020-2023 period, due in June 2023. According to this regulation, non-compliance could lead to sanctions such as additional capital investment requirements, freezing of the TKDN HKT certificate, or even revocation of the TKDN HKT certificate, which would prevent Apple products from being sold in Indonesia.

Febri stated that out of the three possible sanctions, the Ministry of Industry chose the lightest one: an additional capital investment under scheme three for the 2024-2026 proposal. This sanction has been communicated in the Ministry's counter proposal during negotiations with Apple. Febri emphasized that the Ministry imposed the lightest sanction while also providing business ease for Apple to quickly establish its HKT production facility in Indonesia. "However, if Apple still does not comply, we will consider imposing stricter sanctions," he asserted.

Unfortunately, the Ministry has not yet received a revised proposal from Apple, citing the need for more time to make revisions. As a result, the Ministry cannot issue the TKDN certificate for Apple's HKT products, particularly the iPhone 16 series. Consequently, the Product Identification Number (TPP) for all Apple HKT products has also not been issued. Therefore, all Apple HKT products, including the iPhone 16 series, cannot be sold in Indonesia.

Febri mentioned that there are actually no obstacles for Apple to build its HKT production facility in Indonesia. Apple has the financial capability and significant influence to bring Global Value Chain (GVC) suppliers to Indonesia. Additionally, the business climate, skilled workforce, and high-tech ecosystem in Indonesia are also advantages for Apple to enter the market.

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Tag: AirTag Factory Batam