Japanese Automotive Investors Highlight Licensing and TKDN in - Aktualita.co
Jakarta, Aktualita.co — National automotive industry players, alongside their Japanese business partners, have highlighted several obstacles that they believe continue to affect the investment climate in Indonesia. Issues regarding licensing, difficult access to financing for small and medium-sized enterprises (SMEs) in the automotive supply chain, and Domestic Component Level (TKDN) certification were the three main issues presented to the government.
This feedback emerged during a Business Discussion Lunch held by the Coordinating Ministry for Economic Affairs with national automotive industry players and Japanese partners in Nagoya, Japan, on Saturday (September 19, 2026).
The meeting was attended by the Secretary of the Coordinating Ministry for Economic Affairs, Susiwijono Moegiarso, along with the Deputy for Commerce and Digital Economy Coordination, Ali Murtopo Simbolon.
Several companies with strong ties to the Indonesian automotive industry were also involved, including PT Toyota Motor Manufacturing Indonesia (TMMIN), Denso Indonesia, Aisin Indonesia, and Advics Indonesia.
Licensing and TKDN under scrutiny
One of the industry’s primary concerns is the licensing process, which they believe needs to be further simplified so that expansions and new investments can proceed more quickly.
The next issue concerns financing for SMEs that are part of the automotive industry’s supply chain. The presence of local suppliers is crucial for strengthening the production chain while simultaneously increasing the use of domestic components.
The TKDN issue has also received special attention because the automotive industry is entering a transition phase toward electric vehicles.
The technological shift from internal combustion engine vehicles to electric vehicles brings major changes to the types of components used. This condition means that the development of local suppliers, technology, and TKDN certification mechanisms must adapt to industry developments.
Susiwijono stated that the government has received various inputs provided by business players during the meeting.
“The government welcomes all this input and reaffirms its commitment to continuously improve policies through concrete steps, including addressing ongoing investment barriers.”
The government considers improving the investment climate to be one of the important factors in maintaining Indonesia’s position as an automotive industry production base in the region.
Indonesia aims to remain a production base
The relationship between the Indonesian automotive industry and Japanese companies has spanned decades. Several Japanese manufacturers have built manufacturing facilities while developing domestic component supplier networks.
According to the Coordinating Ministry for Economic Affairs, Indonesia is currently not only viewed as a vehicle market but has also developed into part of the global value chain and a vehicle production base for the export market.
During the meeting in Nagoya, the government noted that automotive products manufactured in Indonesia have reached more than 100 export destination countries.
However, maintaining automotive investment is becoming increasingly challenging amidst the rapid changes in the global vehicle industry.
Manufacturers must now allocate large amounts of investment for electric vehicles, batteries, software, and low-emission production technology. Countries in Southeast Asia are also competing to offer incentives to attract such investments.
This situation makes regulatory certainty, the speed of licensing, the quality of human resources, and supply chain readiness increasingly important factors in automotive companies’ investment decisions.
Local supply chain remains a challenge
Susiwijono said the results of the government’s visit to Nagoya show that industrial competitiveness is not determined solely by factory investment.
The ability to master technology, the quality of the workforce, and a strong supply chain also determine a country’s ability to maintain its manufacturing industry.
“Industrial competitiveness is built from a combination of technological mastery, strengthening human resources, and a robust supply chain ecosystem.”
According to the government, these three factors are the foundation for the development of national manufacturing, especially the automotive industry, which has long-standing links with the component, logistics, service, and other supporting sectors.
This is where access to financing for SMEs becomes important.
Small and medium-scale component manufacturers need capital to increase production capacity, purchase new machinery, meet quality standards, and adapt their products to changes in vehicle technology.
Without strengthening domestic suppliers, increasing TKDN will be increasingly difficult to achieve as the structure of vehicle components changes.
Japanese investment continues
The focus on investment barriers does not mean that Japanese automotive companies are stopping their expansion in Indonesia.
In April 2026, the Japan Bank for International Cooperation (JBIC) announced financing for PT Mitsubishi Motors Krama Yudha Indonesia (MMKI) to support the expansion of vehicle manufacturing facilities in Indonesia.
The JBIC loan portion reached approximately US$72 million. When combined with financing from several commercial banks, the total financing value reached approximately US$143 million.
JBIC considers the Indonesian automotive market to remain one of the largest in ASEAN and still holds long-term growth prospects.
The financing is also directed at strengthening the resilience of the Japanese automotive industry’s supply chain and supporting Mitsubishi Motors’ business expansion in the ASEAN region.
In March 2026, the Indonesian government also reaffirmed its strategic relationship with Japan in the automotive, clean energy, and technology sectors. Japan is considered to have played a long-standing role in building the vehicle manufacturing ecosystem in I