TKDN Relaxation Will Not Drive Investors Away from Indonesia, Says Deputy Investment Minister
Deputy Minister of Investment and Downstream Industries/Deputy Head of BKPM Todotua Pasaribu has spoken out regarding plans to relax Local Content Requirements (TKDN) as part of negotiations over the United States' 32 per cent reciprocal tariffs on Indonesia.
Todotua affirmed that the planned TKDN relaxation would not cause investors to flee Indonesia. He argued that the impact of the relaxation could be mitigated through protective policies, including fiscal stimulus measures.
"Not really — if the TKDN relaxation does happen, we can actually pursue fiscal extensification and other measures," Todotua said at the Coordinating Ministry for Economic Affairs office on Monday, 14 April 2025.
"So this is really a strategy. We are also opening up the largest possible share," he added.
Previously, President Prabowo Subianto had instructed his officials to ensure that TKDN regulations are made flexible and realistic in order to maintain the competitiveness of domestic industry in the global market. The President conveyed this during a dialogue session at the Economic Forum held at Menara Mandiri, Jakarta, on Tuesday, 8 April 2025.
"TKDN has good intentions — nationalism. If you know me well, I am perhaps the most nationalist person here. If you were to open my heart, what would come out is the Red and White flag," the President said.
"But we must be realistic. If TKDN is forced through, we end up losing our competitive edge. I fully agree — TKDN should be flexible, perhaps replaced with incentives," he continued.
The Head of State instructed all levels of government, particularly ministers, to reform TKDN policies to be more realistic and not burden domestic industry.
President Prabowo explained that TKDN is not merely a matter of regulation but also encompasses broader aspects. "Please change it — make TKDN realistic. The question of domestic capability and local content is a broad issue encompassing education, technology and science. So it cannot simply be addressed by raising TKDN regulations," he stressed.
Todotua affirmed that the planned TKDN relaxation would not cause investors to flee Indonesia. He argued that the impact of the relaxation could be mitigated through protective policies, including fiscal stimulus measures.
"Not really — if the TKDN relaxation does happen, we can actually pursue fiscal extensification and other measures," Todotua said at the Coordinating Ministry for Economic Affairs office on Monday, 14 April 2025.
"So this is really a strategy. We are also opening up the largest possible share," he added.
Previously, President Prabowo Subianto had instructed his officials to ensure that TKDN regulations are made flexible and realistic in order to maintain the competitiveness of domestic industry in the global market. The President conveyed this during a dialogue session at the Economic Forum held at Menara Mandiri, Jakarta, on Tuesday, 8 April 2025.
"TKDN has good intentions — nationalism. If you know me well, I am perhaps the most nationalist person here. If you were to open my heart, what would come out is the Red and White flag," the President said.
"But we must be realistic. If TKDN is forced through, we end up losing our competitive edge. I fully agree — TKDN should be flexible, perhaps replaced with incentives," he continued.
The Head of State instructed all levels of government, particularly ministers, to reform TKDN policies to be more realistic and not burden domestic industry.
President Prabowo explained that TKDN is not merely a matter of regulation but also encompasses broader aspects. "Please change it — make TKDN realistic. The question of domestic capability and local content is a broad issue encompassing education, technology and science. So it cannot simply be addressed by raising TKDN regulations," he stressed.