The government has introduced a new regulation mandating the use of domestic products with a minimum local content level of 25% in government procurement, as part of efforts to boost the country’s manufacturing sector and reduce reliance on imports.
The rule is part of Presidential Regulation (Perpres) No. 46 of 2025, signed last week by President Prabowo Subianto. The regulation requires central and regional governments, as well as state-owned enterprises, to prioritize domestic goods in procurement and infrastructure projects.
Speaking at the New Energy Vehicle Summit 2025 in Jakarta on Tuesday, May 6, Minister of Industry Agus G. Kartasasmita enthusiastically highlighted a "secret weapon" in Article 66, Paragraph 2b of the new presidential regulation. This newly introduced clause mandates the use of domestic products with a minimum Domestic Component Level (TKDN) of 25 percent, in cases where no product reaches the combined 40 percent threshold of TKDN and corporate benefit value, or when such products are not available in sufficient volume.
“This Paragraph 2b is new, and it shows that the government is becoming more assertive, aggressive, and progressive in protecting the domestic industry,” Agus stated.
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This represents a major shift from the previous regulation. Under the former Paragraph 2a, the use of domestic products with at least 25 percent TKDN was only required if products meeting the combined 40 percent threshold were available. The inclusion of Paragraph 2b marks a stronger and more uncompromising government stance on prioritizing local products.
Minister Agus confirmed that Perpres No. 46/2025, signed last week by President Prabowo, is a concrete example of the government's commitment to supporting national industry. The regulation enforces the obligation for central and regional governments, as well as state-owned enterprises (BUMN), to prioritize the use of domestic products, especially in design and national engineering initiatives.
In tandem with stricter regulations, the Ministry of Industry (Kemenperin) is also launching a major reform of the TKDN certification process. This breakthrough aims to streamline procedures and reduce certification time from up to three months to just ten days.
“This TKDN reform is the Ministry’s contribution to the government’s broader deregulation agenda, designed to simplify and accelerate business processes,” Minister Agus said, adding that the initiative would be a welcome change for businesses seeking quicker recognition and prioritization in government procurement.
This two-pronged strategy—tightening TKDN rules while reforming certification—is expected to significantly boost the domestic industrial sector. With greater market certainty and simplified administrative processes, more local products are expected to become competitive and dominate the domestic market.
The faster certification process is also expected to remove bureaucratic barriers that have long hindered participation, encouraging more companies to increase the local content of their products to qualify for government procurement preferences.
The issuance of Perpres No. 46/2025 and the TKDN certification reform demonstrate a strong policy synergy aimed at achieving national industrial self-reliance. By prioritizing domestic products and streamlining certification, the government hopes to enhance local competitiveness, reduce dependency on imports, and support sustainable economic growth.
Editing by Reiner Simanjuntak
