But that makes good policy all the more crucial. Manufacturers can be choosier. Join them.

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Proponents say the levy would help the country reduce its chronic trade deficit, while foreign handset manufacturers fear their sales will plummet. Phone imports from China and Vietnam have been picking up, and the government sees the tax as a way to improve Indonesia's trade deficit, a destabilizing factor for the financial market. Budi Darmadi, director general of high-tech industry at the industry ministry, estimates the tax would slash the country's imports of cellphones by half. This prospect alarms foreign manufacturers, who have visions of their sales being halved and warn of a surge in illegal imports if the tax measure goes through.

The Indonesian Cellular Telecommunications Association, meanwhile, opposes the tax on the grounds that cellphones are not a luxury item but a tool for supporting the country's development. The government considered introducing such a tax last year, but it dropped the idea out of fear the move would only lend fuel to the black market. The latest effort is being driven by the desire to boost domestic production of mobile phones.

The planned tax would likely have a significant impact on Indonesia's burgeoning smartphone market. A drop in imports at a time when smartphone demand is taking off would provide a huge boost for local manufacturers.