Heaptalk, Jakarta — Indonesia’s Ministry of Public Works (PU) is currently in discussions with the Industry Ministry regarding President Prabowo Subianto’s directive on relaxing the Domestic Component Level (TKDN) policy.
“This matter is still being discussed between the Directorate General of Construction Development at the Ministry of Public Works and the Ministry of Industry, particularly regarding the technical details. We are still working out the details of what the President’s directive on TKDN relaxation entails,” said Public Works Minister Dody Hanggodo during a media gathering held in the spirit of post-Eid celebration. (04/11)
According to Minister Dody, the specifics of the TKDN relaxation directive require careful joint review. He expressed confidence that the directive aims to make project execution more effective and efficient. “I believe that’s the intention—we need to clarify the technical aspects with the Ministry of Industry,” he added.
For context, the President of the Republic of Indonesia recently instructed his ministers to revise the rules on TKDN to be more flexible. The goal is to maintain Indonesia’s industrial competitiveness in the global market.
The directive was issued in response to input from economists urging the government to protect Indonesia’s position in global industrialization. “We have to be realistic. If we force TKDN, we risk losing our competitiveness. Make it flexible,” said President Prabowo.
He noted that the current TKDN policy appears overly rigid, which may deter investors and lead them to prefer other countries. The President also suggested revising the implementation mechanism of TKDN, including the possibility of offering incentives.
Addressing concerns over domestic product development, Prabowo stated that national capacity can still be strengthened through other means, such as investing in human resources, especially in education, science, and technology.
In addition to the TKDN flexibility, the President expressed interest in adopting the “Neck to neck, eye to eye, and point to point” principle proposed by economists. This principle encourages Indonesia to create conditions comparable to those of other countries in attracting foreign investment to support national industrialization.
