President Prabowo Subianto has instructed government officials to revise the Local Contents (TKDN) policy on domestically produced products and services in order to make them more flexible and realistic.
He argued that although TKDN is a policy born from the spirit of nationalism, its rigid implementation can actually weaken the competitiveness of the national industry in the global market.
"Enough with TKDN. Its intention is good, provoking nationalism. But we have to be realistic. Its implementation is by force, which ends up making us less competitive," Prabowo said while adressing the Opening of Economic Symposium held in Jakarta on Tuesday, April 8, 2025.
He suggested that the TKDN policy should be more flexible and can even be replaced with an incentive scheme so as not to burden the industrial sector.
Prabowo emphasized that TKDN is not merely a matter of regulation, but is related to the capacity of domestic resources.
"The issue of domestic capability, domestic content is a broad issue, it is an issue of education, science, and technology. So we cannot increase TKDN by making regulations," he said.
The president’s instruction is a strong signal of a change in the government's approach to TKDN, which has so far been emphasized as a pillar of national industrial independence.
TKDN regulations have previously been regulated through Law No. 3/2014 on Industry, Government Regulation No. 29/2018 on Industrial Empowerment, and Presidential Instruction No. 2/2022 on the Acceleration of the Use of Domestic Products.
As a comparison, in the administration of 7th President Joko “Jokowi” Widodo, the TKDN policy was emphasized as a long-term strategy that must be implemented consistently.
In his speech in August 2017, Jokowi stated that the consistency of TKDN implementation was not only intended to reduce dependence on imported products, but also to encourage technology transfer, create new industries, and open up employment opportunities.
"I am sure that if national industrial products continue to be strengthened and facilitated, they will be able to compete with imported products, both in terms of price and quality," Jokowi said at that time.
Prabowo considered that the TKDN approach, which did not consider the readiness of the industry, could have a negative impact on the business climate. He emphasized that regulations must reflect real conditions in the field and support the inclusive transformation of the domestic industry.
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