Indonesia has rejected Apple’s (AAPL) $100 million investment proposal, deeming it insufficient to lift the ban on the iPhone 16. Investors should note that the ban came after Apple failed to comply with the nation’s requirement that handsets sold domestically must have at least 40% locally sourced components.
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The country’s Industry Minister, Agus Gumiwang Kartasasmita, said that APPL’s proposal does not meet “principles of fairness.” He noted that Apple has invested about IDR244 trillion ($15.4 billion) in manufacturing facilities in Vietnam, compared to a relatively modest IDR1.5 trillion in application-developer academies in Indonesia. Highlighting the disparity, the official said that even with the large investment in Vietnam, Apple only sells 1.5 million units there, fewer than the 2.5 million units it sells in Indonesia.
He noted that, unlike Apple, its rival smartphone makers, Samsung (GB:SMSN) and Xiaomi, have made heavy investments to establish manufacturing plants in the country.
Here’s What Indonesia Seeks From AAPL
The Indonesian government plans to invite Apple representatives to the country for further negotiations. According to the minister, Apple has yet to meet a $10 million investment pledge that should have been completed by 2023. Further, the government is requesting that Apple should make substantial investments extending through 2026 and establish a manufacturing facility in Indonesia.
This request is part of the country’s effort to promote local production and reduce reliance on imports.
What Is the Price Target for AAPL?
Turning to Wall Street, AAPL has a Moderate Buy consensus rating based on 24 Buys, eight Holds, and two Sells assigned in the last three months. At $245.06, the average Apple price target implies a 5.23% upside potential. Shares of the company have gained over 21% year-to-date.
