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Indonesia imposes ban on Google Pixel sales, citing tech giant's failure to non-compliance with 40% local content requirement, sparks controversy

Indonesia has banned the sale of Google's smartphones, after a similar step against Apple's iPhone 16, following the failure by both companies to abide by national rules on using locally manufactured parts. The country's industry ministry confirmed the ban on Thursday, noting that smartphones sold in the country must have at least 40% of the parts produced locally. Google's Pixel phones are thus unavailable in the official retail channels in Indonesia.

According to Febri Hendri Antoni Arief, a ministry spokesperson, the regulations are intended to equalize the playing field for foreign and local investors in Indonesia. “We are pushing these rules so that there's fairness for all investors in Indonesia,” Arief said. He further added, “Google's products have not followed the scheme which we have laid down therefore cannot be sold here”. This ban follows that of Apple's iPhone 16 last week, whereby the government barred it again for the same reason – failure to follow the national content requirements.

Both Google and Apple have choices in the matter of changing either their product or manufacturing processes according to the rules of Indonesia. Smartphone manufacturers often sidestep such requirements by making deals with local suppliers or sourcing more parts from the country. However, Google stated in a statement that it doesn't currently sell Pixel phones through official channels in Indonesia, which may limit the impact of the ban on its direct sales.

As recently published by IDC in May, OPPO is the leading Chinese smartphone brand followed by Samsung of South Korea, which occupied the first two places in Indonesia's smartphone market in the first quarter of 2024. Companies with a significant manufacturing presence in Asia would have likely influenced the government's emphasis on enforcing local content requirements in light of Indonesia's large and increasingly tech-savvy population.

However, the new policies may have negative effects on Indonesia's attractiveness to foreign investors, according to some analysts. Bhima Yudhistira, head of the Center of Economic and Law Studies, called it “pseudo protectionism.” The director said such restraint may erode consumer choice and even diminish investor confidence in Indonesia. “This sets up a negative sentiment for investors who want to venture into Indonesia,” he pointed out, saying the policy will not likely succeed in bringing about the desired economic impact.

Since the ban will be applicable, consumers may purchase Google Pixel devices abroad with the import taxes. The ministry warned it may deactivate illegal imports into the country as it clearly communicates that it will not hold back its regulation.