How TKDN Reform Supports the Government’s Push for Industrial Growth

Jakarta: The Indonesian government is now obligated to prioritize the purchase of goods with Domestic Component Level (TKDN) and Domestic Products (PDN) as part of a broader reform agenda aimed at supporting local industries. This requirement is outlined in Presidential Regulation (Perpres) No. 46 of 2025 on Government Procurement of Goods and Services (PBJ).

The regulation mandates that central and regional governments, as well as state-owned and regional enterprises (BUMN and BUMD), give precedence to procuring goods that meet TKDN and PDN standards.

Minister of Industry Agus Gumiwang Kartasasmita emphasized that the reform is part of a strategic initiative to enhance the use of domestic products, align with the President's directive to strengthen the industrial structure, and boost national competitiveness.

“The Ministry has thoroughly reviewed TKDN implementation to date. These reforms are designed to make the policy more responsive, transparent, and beneficial for domestic manufacturers,” said Agus in a press release on Tuesday, May 13, 2025.

He added that the government would continue to collaborate with stakeholders to ensure effective implementation of the reform.

Presidential Regulation No. 46 of 2025 not only strengthens the TKDN policy framework but also enhances verification processes, introduces industry incentives, and improves oversight to ensure commitment to domestic procurement.

The Ministry of Industry believes this initiative will accelerate the self-sufficiency of the national industry and reinforce the domestic manufacturing ecosystem.
Hierarchy of Government Spending on TKDN-PDN Products.

The regulation also outlines a priority system for government procurement:

1. First, if a product has a combined TKDN and Company Benefit Weight (BMP) score above 40%, it qualifies for government procurement through PBJ, provided its TKDN is over 25%.
2. Second, if no product meets the 40% threshold, goods with a TKDN above 25?n still be procured.
3. Third, in the absence of products with more than 25% TKDN, the government may purchase goods with a lower TKDN.
4. Fourth, if no TKDN-certified products are available, PDN products listed in the National Industrial Information System (SIINAS) may be procured.