The new Domestic Component Level (TKDN) regulation officially came into effect on September 11, 2025, introducing significant changes for Indonesia’s industries. The Ministry of Industry announced Regulation Number 35 of 2025 on TKDN Certification and Company Benefit Weight (BMP), designed to streamline certification and provide incentives for foreign investors. The reform replaces outdated rules and seeks to strengthen Indonesia’s manufacturing competitiveness while safeguarding national interests.
TKDN Certification Process Made Easier
One of the main goals of the new policy is to simplify the TKDN certification process. Business players had long complained about the old system, which was complicated and consumed too much time. The latest regulation introduces digital integration and reduces bureaucracy, allowing for faster and more transparent verification of domestic components. These adjustments aim to support both local industries and foreign companies looking to expand in Indonesia.
Minister of Industry Agus Gumiwang Kartasasmita highlighted the importance of the reform, stating, “The old regulation had been in effect for over a decade and is no longer relevant. We want to make it easier for investors, including foreign ones, to invest in Indonesia without sacrificing national interests.” By cutting red tape and improving efficiency, the government intends to transform certification from a barrier into an enabler of growth.
Foreign Investor Incentives Boost Confidence
The new rule also introduces a major incentive for foreign investor participation. Companies that hire a significant number of local workers automatically receive a 25 percent TKDN value. This mechanism not only encourages job creation but also supports technology transfer to Indonesia. It reflects the government’s effort to link foreign investment directly with local economic benefits.
Analysts expect this incentive to attract more foreign direct investment, particularly in the manufacturing, technology, and automotive sectors. These industries have long relied on imports, but the new system creates opportunities for growth within Indonesia. Minister Agus dismissed speculation that external pressure shaped the policy, clarifying, “This is purely for Indonesia’s interests, addressing the evolving dynamics faced by industrial players.” The clear alignment between investor incentives and national goals is likely to strengthen confidence in Indonesia’s economic direction.
Positive Impact on Indonesia’s Manufacturing Sector
The changes are expected to bring measurable improvements to Indonesia’s manufacturing sector. With a simplified certification process and direct benefits for companies that prioritize local employment, the regulation could reduce dependence on imports. Manufacturing, technology, and automotive industries stand to gain the most, as they can source more components locally while meeting TKDN requirements more easily.
This shift supports Indonesia’s ambition to build a more resilient economy. By reducing vulnerability to global supply chain disruptions, the new regulation positions local industries to expand and compete on a regional scale. The anticipated rise in domestic production also aligns with the government’s long-term vision of industrial self-reliance.
Government’s Commitment to Local Component Policy
The government remains firm in its commitment to the local component policy, emphasizing the balance between openness to investment and the protection of local industries. Minister Agus reiterated that the reform was not influenced by foreign governments or global political pressures. Instead, it reflects Indonesia’s strategic decision to adapt to new economic realities.
“This is purely for Indonesia’s interests, addressing the evolving dynamics faced by industrial players,” he emphasized. The message underlines the government’s dedication to ensuring that while foreign investors benefit from incentives, the national interest remains central. By placing local components at the heart of industrial policy, the government reinforces its focus on sustainable and inclusive growth.
Policy as a Catalyst for Growth
The new TKDN regulation represents more than administrative reform; it acts as a catalyst for economic growth. Easier certification, foreign investor incentives, and an emphasis on local components collectively provide a foundation for stronger industries. Businesses are encouraged to adapt quickly and take advantage of the opportunities this policy creates.
With the regulation now in effect, companies can access the full details of Regulation Number 35 of 2025 through official government publications or industry announcements. Those who move early will be best positioned to benefit from Indonesia’s new industrial era. The local component policy, designed with both investors and national interests in mind, stands as a key driver of Indonesia’s manufacturing future.
Source: disway.id
Image: Canva
