BlackBerry responds to ‘made in Indonesia’ regulations

BlackBerry’s new venture signed last month with an affiliate of PT Telekomunikasi Indonesia, the country’s largest wireless carrier, will see its Indonesian partner produce, promote and distribute all BlackBerry-brand devices in Indonesia.

The venture comes as international phone vendors gear up to comply with the latest “made in Indonesia” regulations to tap growth in what is poised to become the world’s fourth-largest smartphone market by 2020, with total annual sales of nearly $US1 billion ($1.31bn) by then, according to research firm Euromonitor International.

Adopted in July, the latest rules give producers more options when it comes to meeting next year’s 30 per cent quota for “local content” — which previously focused on local manufacturing but can now include software or investment — in their 4G-enabled tablets and smartphones sold in Indonesia, up from 20 per cent this year. The requirement will rise to 40 per cent in 2018.

BlackBerry’s joint venture was “created in support of the Indonesian government’s effort to promote manufacturing of locally sourced products”, said Ralph Pini, general manager of devices at the Waterloo, Ontario-based firm, which said last month it would stop making phones and focus on software.

Indonesia is a crucial market for BlackBerry. Its BBM messaging service is the top messaging platform in the country of 250 million people with nearly 60 million monthly active users as of June, BlackBerry said. WhatsApp and Facebook Messenger trail with about 50 million active users for each app, according to estimates from Britain-based social media consultancy We Are Social.

In 2012, Indonesia introduced regulations requiring importers of mobile phones to set up assembly plants in the country by the end of 2015. In September 2014, the government issued regulations requiring all 4G devices sold in Indonesia to include at least 30 per cent locally-sourced components by 2017.

Analysts say the more-flexible regulations passed in July make it easier for handset makers to meet requirements, given that they allow the quota to be reached via other options in addition to manufacturing.