Prabowo’s Stance on TKDN Sparks Debate

President Prabowo Subianto’s expressed intention to potentially ease domestic component level (TKDN) regulations is causing ripples throughout Indonesia’s manufacturing sector.Some businessman are claiming that foreign factories are considering relocating from Indonesia in response to this potential policy shift.

Industry Experts Weigh In

Daniel Suhardiman, Secretary General of the Association of electronic Entrepreneurs (Gabel), emphasizes the delicate balance of TKDN and technical regulations. He views them as two sides of the same coin, powerful if used properly.

There are indications (foreign factory lift foot), there is once, there are already a number of companies. Let alone waiting (TKDN is officially loosened and the Pemek was deleted),once Pak Prabowo spoke when the workshop was already in a squares,’Oh no need for this part’,assembly It is indeed closed here.

Daniel Suhardiman, Secretary General of Gabel

Suhardiman voiced concerns during a discussion at the Industrial Journalists Forum (Forwin) in South Jakarta, highlighting that some companies are already contemplating departures, even before any official changes to the TKDN policy are implemented.

The Double-Edged Sword of TKDN

the core issue revolves around competitiveness. While TKDN aims to bolster local industries, strict enforcement can inadvertently make Indonesia less attractive to foreign investors. This is notably relevant in a globalized market where businesses constantly seek the most cost-effective and efficient production locations.

Suhardiman cautioned against being too good to investors, suggesting that an overly lenient approach coudl undermine existing domestic assembly operations. He argued that a thriving assembly sector is crucial for fostering a larger economic ecosystem, including the growth of component and raw material industries.

Should wake up assembly more and more,the scale of the economy appears,there is starting to make the component industry. The component industry is growing, the raw material industry appears. Later this will break up if the government is changing policies.

Daniel Suhardiman, Secretary General of gabel

flexibility vs. Competitiveness: A Balancing Act

While acknowledging the need for TKDN, President Prabowo has openly stated that the current regulations may hinder Indonesia’s competitiveness. He suggested exploring alternative approaches, such as incentives, to encourage domestic production without imposing rigid requirements.

We must be realistic. this forced TKDN is finally less competitive… I strongly agree that the TKDN is flexible, maybe replaced with incentives. Please yes my assistants, my minister, never mind, realistic. Please change, TKDN is made realistic!

President Prabowo Subianto

This stance reflects a broader concern about indonesia’s ability to compete in the global market, especially considering potential trade barriers and tariffs imposed by other countries.

Current TKDN Framework and Its Implications

The current TKDN framework is outlined in the Minister of Industry Regulation (Permenperin) No. 29 of 2017. It offers various investment options for fulfilling TKDN certification, including manufacturing, submission, and innovation schemes.

However, the strict enforcement of these regulations has had tangible consequences. For example, Apple’s iPhone 16 was reportedly unable to be sold in Indonesia due to the manufacturer’s failure to meet the required domestic component levels.

Looking Ahead: The Future of Manufacturing in Indonesia

The debate surrounding TKDN highlights the complex challenges facing Indonesia’s manufacturing sector. Finding the right balance between promoting domestic industries and attracting foreign investment is crucial for lasting economic growth. The coming months will be critical in determining the future direction of Indonesia’s industrial policy and its impact on the global market.