Entrepreneurs Are Worried That Electronic Investors Will Escape Abroad Due To The Relaxed TKDN Discourse

Electronics (unsplash)

JAKARTA - The Association of Electronic Entrepreneurs (Gabel) has warned President Prabowo Subianto's discourse to relax the Domestic Component Level (TKDN) policy could trigger the escape of electronic industry investment abroad.

The TKDN policy was made in order to increase investment in industrial products in the country. The TKDN value of an item is calculated based on direct materials/materials, labor and indirect factory costs.

Secretary General of Gabel Daniel Suhardiman said that the TKDN policy must be strengthened to maintain the competitiveness of the domestic industry. Moreover, many electronics manufacturers have the ability to produce local products.

"In our opinion, the (TKDN) policy should be strengthened and not relaxed. If it is relaxed, countries or other commodities will also ask for easing," said Daniel in his official statement, Thursday, April 10.

This is at the same time in response to the government's plan to relax TKDN for requests for information and communication technology (ICT) products from the United States (US). The plan is one of the negotiations offered to reduce the reciprocal rate of US imports of 32 percent of Indonesian goods.

Even so, Daniel asked the government to exclude electronic products in the TKDN easing plan. He emphasized that the implementation of electronic sectoral TKDN is important to increase the utilization of the electronics industry as well as as collateral and attract investment.

"It is better if the implementation of TKDN for electronically expanded TKDN is sectoral, where every electronic equipment other than cellphones, Handheld Computers and Tablets (HKT) has its own policies," he said.

So far, the use of TKDN has been carried out to make local products can be used in the procurement of government goods and services. He hopes that every Rp1 tax collected from the people and entered the APBN/APBD and BUMN/BUMD can be spent on local products.

Daniel assessed that if the state budget is used for shopping for local products, the added value will be an increase in GDP and absorption of domestic labor.

"If state money is used to buy imported products, the added value is abroad. This TKDN, right, is only for government spending. So, the domestic industry should prioritize if there is one. If there is no industry, right, it can still be imported," said Daniel.

Furthermore, Daniel is of the view that if the TKDN relaxation is implemented as a whole for various sectors, it is feared that it will reduce industrial utilization, especially for products purchased through the TKDN program.

"And the uncertainty of this regulation will create doubts and transfer of investment in the electronic sector outside Indonesia. Then, of course, domestic producers have the potential to lose business to government (B2G) sales, either through tenders or e-Catalogs," he added.

Previously, President Prabowo Subianto instructed his staff to change the rules of the industrial TKDN. This rule will be changed after receiving proposals from entrepreneurs.

Prabowo assessed that the TKDN rules were indeed made to maintain local components. However, if these regulations are constantly maintained, the Indonesian industry may not be competitive.

"I have given instructions for TKDN, the intentions are good nationalism, if you have known me for a long time, yes, I am the most nationalist, if my heart is opened, maybe those who come out in red and white. But we have to be realistic if TKDN is forced, we can lose, not competitive," Prabowo explained at the Joint Economic Facilities of the President of the Republic of Indonesia at the Mandiri Tower, Jakarta, Tuesday, April 8.

He asked that the TKDN rules be changed more flexibly and realistically. "It's just that TKDN is flexible, it's replaced with incentives. Please, yes, my assistants, my ministers are realistic, TKDN is made realistic," said Prabowo.