JAKARTA (Yosefardi) – Indonesia’s Communications and Information Minister, the Trade Minister and the Industry Minister had last week signed a regulation regarding the mandatory use of local components for 4G smartphones starting January 2017.
4G smartphone manufacturers in Indonesia will be required to use at least 30% of local content in domestically-sold smartphones and at least 40% for base transceiver stations (BTS).
Earlier this year the Indonesian government had issued a draft regulation on this subject.
This new mandatory minimum local content rule was primarily imposed to boost the domestic manufacturing industry in a bid to reduce dependence on imports of such products (which negatively affect the country’s trade and current account balances).
Previously, the government had already introduced a measure to protect the domestic smartphone industry.
In mid-2014, it imposed a 20% luxury-goods tax on the domestic sale of high-spec imported smartphones in an effort to limit the inflow of imported smartphones and boost the local smartphone manufacturing industry.
Failure to meet the new minimum local content requirement by January 2017 can result in the suspension of licenses and a ban on sales and distribution activities in Indonesia.
South Korea-based Samsung Electronics Indonesia revealed that it would meet the quota as most of its Indonesia-manufactured smartphones already have local content at 20%.
Smartphone penetration in Indonesia is still low. It is estimated that less than 30% of the Indonesian population currently (July 2015) owns a smartphone, implying that the country lags (far) behind China which has a smartphone penetration rate of nearly 80%.