Apple still cannot sell its iPhone 16 in Indonesia despite striking a deal to build a local production facility there, as it has not met domestic content rules, the industry minister said on Wednesday.

Last year, Indonesia banned iPhone 16 sales after Apple failed to meet requirements that smartphones sold domestically should comprise at least 35% locally-made parts.

Minister Agus Gumiwang Kartasasmita said Apple had struck a deal to build a facility producing its Airtag tracking device on Indonesia's Batam island, close to Singapore, but that still would not count as a locally-made iPhone part.

"There is no basis for the ministry to issue a local content certification as a way for Apple to have the permission to sell iPhone 16 because (the facility) has no direct relations," he said, adding the ministry would only count phone components.

Indonesia's investment minister said late on Tuesday the factory would be worth $1 billion and that it would start operations next year.

Agus, who held two days of meetings with Apple's vice president of global government affairs Nick Ammann, said Apple had proposed "innovative investment" which Indonesia had countered.

Apple has no manufacturing facilities in Indonesia, a country of about 280 million people, but has since 2018 set up application developer academies.

(Reporting by Bernadette Christina; Writing by Stanley Widianto; Editing by Martin Petty)