February 23, 2015
The United States is pressing Indonesia to relax local-content rules it believes will handicap efforts of tech firms such as Apple to expand into one of the world’s last big markets where demand for high-end smartphone has yet to really take off. The regulation, which would come into force on Jan. 1, 2017, requires companies that sell smartphones and tablets in the fast-growing economy of 250 million people to produce about 40 percent of their content locally.
Apple’s supplier Foxconn, whose flagship listed unit is Hon Hai Precision Co Ltd, has been dragging its feet as it negotiates with the Indonesian government over a proposed investment that would include manufacturing smartphones. There was no immediate response from Apple and Samsung did to requests to comment on the local-content rule.
The American Chamber of Commerce (AmCham) raised concerns about the rule in a Feb. 12 letter to Rudiantara. "We fear that the approach taken in this draft regulation could inadvertently restrict access to new technologies, raise the cost of ICT for Indonesian companies, stimulate grey and black markets for mobile phones, and carry other unintended consequences," AmCham said in the letter.
"The policy of forced localization of manufacturing activities could have implications in terms of Indonesia's WTO obligations," the letter said. The United States, which is currently pursuing four trade cases against Indonesia, has repeatedly raised concerns about Indonesia's rules on local content in investment in the telecommunications sector at the WTO.
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