Indonesia Exempts US Products from Local Content Requirement (TKDN), Trade Minister Says Government Focuses on Strengthening National Industry

JAKARTA - The Indonesian government will exempt US companies and their products from local content requirements, or the obligation to meet the Domestic Component Level (TKDN).

For your information, TKDN is a form of non-tariff barrier that Indonesia has implemented to protect domestic industries. This policy also aims to attract investment in the manufacturing sector and encourage local industrial growth.

Minister of Trade Budi Santoso emphasized the importance of strengthening the competitiveness of domestic products and empowering the local economy.

According to him, when domestic economic activity is running smoothly, people will increasingly love and use domestic products, ultimately reducing dependence on foreign products.

"The first thing we're doing is increasing the competitiveness of domestic products. The second is stimulating economic activity like this. Because if this is moving, people will actually love domestic products and use them, and automatically they won't use foreign products," he told the media on Wednesday, July 23.

He further stated that the government is also focusing on increasing exports and attracting investment, including from China, which is interested in producing goods in Indonesia.

"Now, it turns out that many people are interested in investing, even from China, to invest in Indonesia to produce our export products. They say we have good market access to the European Union, which opens up potential for export," he said.

Budi explained that in addressing tariffs and strengthening international trade, the first step is to negotiate and seek new markets.

He added that these new markets can be achieved through trade agreements with several countries and regions, including through cooperation such as the IEU-CEPA (Indonesia–European Union Comprehensive Economic Partnership Agreement).

"This means that many other countries are doing the same thing, for sure. When he intercepted the US, he was looking for new markets. One of those markets was definitely Indonesia, because we have a large market," he said.