Heaptalk, Jakarta — President Prabowo Subianto, during a dialogue session at the Economic Forum held at Mandiri Tower in Jakarta on Tuesday (04/08), urged his administration to make domestic content policy (tingkat komponen dalam negeri/TKDN) more flexible and realistic to maintain the competitiveness of Indonesian industries in the global market.
“The domestic content policy is well-intentioned—it’s about nationalism. Those who’ve known me long enough would say I’m perhaps the most nationalist among us. If you were to cut open my heart, you’d probably find the red and white [of the Indonesian flag]. But we must be realistic. If we force strict domestic content rules, we’ll lose competitiveness. I strongly support making domestic content level more flexible—perhaps even replacing it with incentives,” the President added.
Prabowo also instructed all government officials, particularly ministers, to revise domestic content policies to be more pragmatic and avoid burdening local industries. He emphasized that domestic content requirements are not merely about regulation but involve broader systemic factors. “Please adjust these policies to be more realistic. Domestic capability isn’t just about rules—it’s about education, technology, and science. We can’t solve this by simply mandating higher TKDN percentages,” he stated.
His remarks signal a potential shift in Indonesia’s industrial policy discourse. Prabowo even asked his ministers to reconsider overly rigid regulatory approaches, stressing that domestic capacity cannot be built through regulation alone but requires parallel investments in education, R&D, and technology.
Industry Ministry defends TKDN as investment magnet
In response, the Ministry of Industry reaffirmed that domestic content level policies are designed to keep the domestic market attractive to investors, mainly through government and state-owned enterprise procurement.
The vast domestic market is seen as a key advantage for industrial growth. For instance, products from foreign investors manufacturing in Indonesia—such as electronics using public frequencies, a sector bound by domestic content level rules—can be directly absorbed by the market. “We must fully leverage our market’s appeal to attract foreign investors through TKDN policies,” explained Febri Hendri Antoni Arif, the Ministry’s spokesperson.
He described the domestic content level as a “red carpet” for foreign investors looking to establish production facilities while accessing Indonesia’s consumer base. This highlights the tension between nationalism and realism: while strengthening local industry remains a priority, globalization demands open competition. Overly restrictive policies risk causing Indonesia to miss opportunities for high-quality investments.
