President Prabowo Subianto has directed his administration to revise Indonesia’s local content requirement (TKDN) regulations to be more flexible and realistic. He emphasized that such a shift is necessary to safeguard the competitiveness of domestic industries in the global market.

“TKDN is well-intentioned. It’s nationalism,” said Prabowo during a dialogue session at the Sarasehan Ekonomi event held at Menara Mandiri, Central Jakarta, on Tuesday, April 8, 2025.

“If you’ve known me long enough, maybe you'd say I’m one of the most nationalistic. If you opened my heart, maybe red and white would come out,” he added.

TKDN Must Not Hurt Industrial Competitiveness

President Prabowo acknowledged the importance of TKDN but warned that enforcing it too rigidly could backfire.

“We have to be realistic. If we force TKDN, we’ll end up being uncompetitive. I fully agree—TKDN must be flexible, perhaps replaced with incentives,” he stated.

The president instructed all government officials, particularly ministers, to adapt TKDN policies so they do not become burdensome to domestic businesses. He clarified that TKDN is not just about rules but involves broader national capabilities.

“Please revise it. Make TKDN more realistic. Local content is a wide issue—it’s about education, science, and technology. It can’t be solved just by raising TKDN figures through regulation,” Prabowo explained.

Ministry Reaffirms TKDN Will Not Be Abolished

Minister of Communication and Digital, Meutya Hafid, confirmed that the government has no intention to eliminate or reduce TKDN mandates. Instead, the objective is to make the policy more adaptable to industrial realities.

“The President didn’t say it would be reduced. He asked us to find a solution. So, the idea is to find how TKDN can be adjusted,” Meutya said during a visit to the Ministry of Housing and Settlement on the same day.

Apple Deal as a Model for Flexible TKDN

Meutya cited the government’s agreement with Apple concerning the iPhone 16 as an example of a flexible approach to TKDN compliance. Rather than local manufacturing, Apple fulfilled its obligations through investment in training and education centers.

“For instance, with Apple, we previously converted TKDN obligations into education and other related investments,” she explained.

Ministers Tasked with Adjusting TKDN Metrics

President Prabowo reiterated his directive for ministries to reformulate TKDN calculations and regulations more realistically. He voiced concern that rigid enforcement could harm local industry performance.

“If we force TKDN, we’ll become less competitive,” he said during the economic policy forum. “Ministers, please be realistic. The local capability issue is broader—it involves education, science, and technology. It can’t be resolved just by pushing regulations.”

PHOTO: SEKRETARIAT NEGARA

This article was created with AI assistance.