Apple Scraps Investment Plans in Indonesia, What Should the Government Do?

coal mine

The tech giant Apple was reportedly interested in investing in Indonesia’s tin mining industry for further downstream activities. However, the company canceled its plan due to the prevalence of illegal mining practices in the country that violate environmental, social, and governance (ESG) standards. What should the government do then?

Deputy Minister for Investment and Mining Coordination at the Coordinating Ministry for Maritime Affairs and Investment (Kemenko Marves), Septian Hario Seto, revealed that Apple canceled its investment plan in Indonesia due to the traceability issue of tin raw materials used in its products.

According to Seto, “when large companies want to invest, they will conduct in-depth checks on the raw materials of their products.”

Apple wanted to ensure the traceability of tin in Indonesia, from licensing, and mining practices, to sustainable business principles or ESG.

Therefore, an economic observer at SBM ITB, Anggoro Budi Nugroho, commented on the issue, saying that the illegal tin content problem in Indonesia has been growing since 2013. Some well-known phone brands were reported to have used a tin with illegal content, including a giant electronics company.

Anggoro recommends that the government should immediately address the issue to reduce investment risks and improve confidence in Indonesia’s governance certainty.

He also emphasizes that the ease of doing business in Indonesia has stagnated since before the pandemic and currently ranks 73rd in the world.

The low ranking may reduce investor interest, and if global distrust towards Indonesia increases, investors may demand a higher risk premium, which would discourage investment.

Furthermore, the cancellation of Apple’s investment in Indonesia has received global attention, and it could negatively impact the protection of shareholders, as well as the government’s efforts to promote downstream activities and optimize the tin industry.

The production of tin in Indonesia has reached around 80,000 tons in 2022, with only 5% absorbed by the domestic industry, while the rest is exported.

Therefore, the Indonesian government must take action against illegal mining practices and improve the country’s ESG standards to attract more responsible and sustainable investment.