Indonesia is set to finalize a new law next month, which would take effect in January 2017. This new law managed to attract attention from world's biggest smartphone manufacturers. What does it say? Well, according to it, starting January 1st 2017, at least 40% of smartphone and tablet parts that are used while building the devices that are sold in that Asian country must be supplied from within the Indonesian borders. This, of course, doesn't sit well with many smartphone manufacturers all around the world, Apple included.
This law could cause a huge increase in pricing of smartphones and tablets in Indonesia, and as a reminder, Indonesia is a huge market. That Asian country has a population of over 250 million people, and a third of them own a smartphone. Indonesia Communications Minister Rudiantara says that this law will be finalized next month, and that it will benefit Indonesia considering that they'll get a big chunk of smartphone sales share in the country.
It will be interesting to see what happens next in Indonesia, but the office of U.S. Trade Representative is going to try to change the outcome here. They're talking to Indonesian authorities in the attempt to alter this law, and the American Chamber of Congress also mentioned this law in their letter to Communications Minister Rudiantara. This might not be such a big deal for Samsung, of example, considering that this Korean giant already opened up a plant in Jakarta, but the majority of other OEMs will have huge issues here. Indonesia's smartphone manufacturing industry is really young at this point, and it will hardly be able to meet the demand in the country.
This is the letter sent from American Chamber of Congress to Indonesian Communications Minister 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." What are your thoughts here? Do you think that this law will go through in Indonesia, or will they change their mind before long?