Apple plans Indonesia R&D investment to meet new phone sales rule

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According to a report on Wednesday, Apple's plan to build research and development facilities in Indonesia, a move formulated to satisfy a new rule requiring that foreign made phones contain a percentage of domestically produced components, has been approved by that country's government.

Indonesia's Minister of Communications and Technology Rudiantara, who is addressed by only one name, informed Apple of the upcoming edict during a trip to California last month, reports Bloomberg.

The stipulation, which takes effect in 2017, requires foreign phone makers source at least 30 percent of components from domestic products. Rudiantara said Apple can "take the hardware route or the software and development route" to meet that criteria.

"Apple said it would like to establish the R&D facilities," he said.

The U.S. government is also apparently on board, as Rudiantara said both U.S. Assistant Secretary of State for Economic & Business Affairs Charles H. Rivkin and U.S. Ambassador to Indonesia Robert Blake were "okay" with Indonesia's plan after being briefed on the matter. Indonesia, long reliant on imports, is attempting to bolster domestic manufacturing assets with the new rule.

For Apple, building out local R&D capabilities might be worth the investment, as Rudiantara said Indonesia imported some $5 billion worth of smartphones last year.

Apple is looking beyond developed markets like North America and Europe to areas that can maximize iPhone's growth potential. China is foremost among these emerging markets and the company has dedicated massive resources to building out its retail presence in the country. The gambit is paying off, as Apple reported China revenue hit $12.5 billion for the most recent fiscal quarter, a year-over-year increase of 99 percent.