Indonesia Drafts Rules for Local Content Above 40%
Indonesia Drafts Rules for Local Content Above 40%
Reporter
July 24, 2026 | 05:53 pm
TEMPO.CO, Jakarta - Indonesia will adjust regulations to accommodate companies with a Domestic Component Level (TKDN) above 40 percent to have the same access as the Special Economic Zone (SEZ).
Finance Minister Purbaya Yudhi Sadewa announced the policy at the 12th Debottlenecking Channel Meeting held by the Task Force for Accelerating the Government Program to Support Economic Growth Improvement (P3M-PPE), on Thursday, July 23, 2026.
“We will regulate it so that domestic producers who already have factories here have the same opportunity to compete in SEZs,” Purbaya said in a press release on Thursday, July 23, 2026.
The meeting, led by Purbaya and Deputy for Economic Affairs at the Presidential Secretariat Satya Bhakti Parikesit, was attended by business actors as well as relevant ministries and institutions to discuss various investment obstacles conveyed through the debottlenecking channel.
During the meeting, the government discussed two complaints from business actors. The first complaint came from PT Tigaraja Putra Persada, which is developing an integrated tourism area and cable car in Lake Toba. The company believes the project faces regulatory obstacles because railway regulations do not specifically address cable cars as tourism facilities. Additionally, some project locations are in protected forests, production forests, and other areas designated for land use (APL).
The government agreed on six follow-up actions to address the issues, including coordinating to ensure the scope of the National Strategic Project (PSN) in the Lake Toba Super Priority Tourism Destination (DPSP) area, ensuring cable car categories with the Ministry of Transportation, discussing business schemes with the Investment and Industrial Estate Agency/BKPM, and holding further meetings with PT Tigaraja Putra Persada and the Directorate General of Railways to discuss regulatory aspects, business classification, tariffs, and safety. The Ministry of Forestry will also facilitate the completion of the permits required by the company.
The second complaint was submitted by the Indonesian Electrical Equipment Producers Association (APPI) and PT Schneider Indonesia. The companies believe that there is unfair competition in the SEZs because the policies favor imported products over those produced domestically.
According to the complaint, local producers still bear the cost of 5 to 15 percent import duties on raw materials, income tax, regional levies, and the cost of complying with Indonesian National Standards (SNI). Meanwhile, imported goods entering SEZs receive several advantages, including exemption from the SNI obligation. APPI and PT Schneider Indonesia also emphasized the need to evaluate import master list regulations, which have not been updated in six years.
Read: Most Foreign Companies Investing in Indonesia See Profits
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