The government continues to promote the Increased Use of Domestic Products (P3DN) and a higher domestic component level (TKDN) to achieve self-reliance in domestic industry.
“Through this local content policy, we hope domestic industry becomes more globally competitive and keeps supporting the national economy. We are also pushing for import substitution to reach 35 percent by the end of 2022,” Minister of Industry Agus Gumiwang Kartasasmita said in Jakarta on Monday (3/1).
TKDN certification benefits industry, above all because its products will be absorbed more through government procurement. “Domestic products must be used by users in procurement of goods and services funded by the State Budget (APBN), Regional Budgets (APBD), loans, grants, cooperation schemes with the government, and those exploiting state-controlled resources,” the Minister stressed.
In procurement, users must use domestic products if there are domestic products whose combined TKDN and Company Benefit Weight (BMP) value is at least 40%. Such mandatory domestic products must have a TKDN of at least 25%.
In 2022, the Ministry of Industry (Kemenperin) will help domestic companies obtain 1,250 Domestic Component Level (TKDN) product certificates, allocating IDR 20 billion from the National Priority (PN) budget. “Products to be supported include medical devices, agricultural tools and machinery, pharmaceuticals, machinery, electronics and telematics,” the Minister explained.
Besides these sectors, the Ministry of Industry will facilitate TKDN certificates for metals, electrical, chemicals, fertilizers, automotive and components, ceramics, cement, textiles and products of small and medium industries (SMIs).
A TKDN certificate is legal proof of a product's TKDN value. The government therefore continues to optimize the obligation to use domestic products, including by promoting regulations containing this obligation, such as Government Regulation No. 29 of 2018 on Industrial Empowerment.
Industrial companies can use Kemenperin's free TKDN certification by meeting requirements including having an industrial Business License or Business Identification Number (NIB), a deed of establishment, a Taxpayer Identification Number (NPWP), and registration in the National Industrial Information System (SIINas).
“All industrial companies with valid licenses that produce, invest and are located in Indonesia can use the government's free TKDN certification,” the Minister said.
Eligible industries are those with a TKDN of at least 25%, and each company can be supported for up to 8 (eight) product certificates per year.
To obtain a TKDN certificate, industry can submit a self-assessment of its products' TKDN value. The self-assessment is then verified by Independent Verification Bodies appointed by Kemenperin, namely PT Surveyor Indonesia and PT Sucofindo.
After verification, the TKDN certificate is validated by Kemenperin. With this layered verification process, the resulting domestic component level is expected to match industry's actual capabilities.
However, the Minister reminded companies seeking TKDN certification not to be influenced by those seeking personal gain from the TKDN certification policy. “I have received reports of so-called TKDN brokers, who contact companies and promise to arrange high TKDN values,” he stressed.
This runs counter to the government's efforts to increase industrial self-reliance. “We also ask all stakeholders to encourage regional industry players to obtain TKDN certification for their products,” the Minister said.
In 2021, free TKDN certification exceeded its target, reaching 9,524 of 9,000 targeted product certificates. “To disseminate information about the P3DN Program, Kemenperin also continues outreach to related parties at central and regional levels,” said Kemenperin Secretary General Dody Widodo.
TKDN certification in procurement is part of the P3DN Program, overseen by the National P3DN Team formed by Presidential Decree No. 24 of 2018, chaired by the Coordinating Minister for Maritime Affairs and Investment and including all Ministers and Heads of Agencies.
The Minister of Industry serves as Executive Chair as appointed by the President. To optimize implementation and supervision of domestic product use, National P3DN Team Working Groups have also been formed: Monitoring, TKDN and Outreach.
“Ultimately, a key driver for comprehensive implementation of the P3DN Program is the goodwill of all stakeholders, reflected in their support for domestic industry,” the Secretary General said.
Kemenperin Inspector General Masrokhan added that the TKDN improvement program gives Indonesian industries the opportunity to grow. “P3DN implementation is expected to accelerate import reduction while increasing industrial utilization,” he said.
Source: Press Release of the Ministry of Industry of the Republic of Indonesia