Apple is the latest smartphone maker to announce plans to set up facilities in Indonesia after the government approved a regulation requiring 4G devices to have at least 30 per cent locally sourced components.

The country’s Minister of Communications and Information, Rudiantara, visited Apple in the US recently to discuss the content rules, which don’t go into effect until 2017, DealStreetAsia reported.

Rudiantara, who goes by one name, said smartphone makers could meet the local content requirement by taking “the hardware or software and development route”. The government said it will advise companies next month how much they need to invest to meet the rules.

Taking the R&D route means Apple won’t have to produce iPhones locally to comply.

Indonesia is the world’s third most populated country, with 254 million people, and last year imports of mobile devices reached $5 billion.

Demand for smartphone is increasing rapidly as prices fall and the major operators start to roll out 4G networks. Indonesia is the third largest smartphone market in Asia behind China and India. Smartphone shipments increased 30 per cent in Q2 from a year ago, according to Counterpoint Research. 4G models expanded 300 per cent during that quarter to one million units.

In August Taiwanese device maker Acer announced it was looking for an OEM partner in Indonesia to manufacture smartphones to avoid the country’s high import duties. In April Chinese smartphone maker Xiaomi said it planned to assemble smartphones in the country this year to comply with the local content law.

Hong Hai Precision (better known as Foxconn) cancelled plans in September to build a handset factory in Indonesia and is considering investing in neighbouring Malaysia. Foxconn, the world’s largest electronics contract manufacturer, had asked the Indonesian government for free land in exchange for its $1 billion investment, but the government didn’t approve to the request.