A Triple Bottom Line: Apple's Investments in Indonesia

Abstract

Foreign Direct Investment (FDI) can lead to productivity gains and economic development in developing countries. But creating a regulatory framework that both attracts foreign corporates and makes the most of their investments for domestic economic development is challenging. In 2015, Apple wanted to invest in the Indonesian market, but wasn’t willing to meet existing regulatory requirements. After two years of talks, Indonesia introduced a new and novel approach to local content requirements that has achieved a triple bottom line –benefits for the country and the company, while also seeing Apple act consistently with its most lofty corporate values. Under Indonesia’s new regulation, rather than manufacturing locally, Apple invested in three training academies across the archipelago to gain access to local consumer markets. These training Academies have developed Indonesian human capital and had spill-over benefits for the local education and technology sectors. While Apple pursued the academies to gain market access, it also benefits from the development of local apps that boost the attractiveness of the iPhone to Indonesian consumers. This case study will explore the use of local content requirements in Indonesia, how Apple has complied with Indonesian regulations, and the benefits of Apple’s training academies. The case study will consider the scalability and replicability of Indonesia’s approach.