The Indonesian Construction Contractors Association (Gapensi) has warned that the government's move to relax the Domestic Component Level (TKDN) policy, particularly for steel, iron, and piping used in infrastructure, could reduce Indonesia to a mere market for foreign products and threaten local industries.

The concern emerged after President Prabowo Subianto on April 8, 2025 called for a more flexible and realistic TKDN policy to maintain national industrial competitiveness in the global market.

The policy shift is believed to be a response to the United States’ decision to impose a reciprocal import tariff of 32 percent on Indonesian goods. The U.S. has urged Indonesia to amend its TKDN rules as part of ongoing trade negotiations.

Gapensi Secretary-General, La Ode Safiul Akbar, argued that if the relaxation is enforced, local industries − particularly steel, iron, and pipe manufacturers − would be at risk of collapse due to an influx of cheaper imported products.

“If domestic industries are squeezed out by imports, massive layoffs will be inevitable. Even now, our unemployment rate is high and nearly every factory could feel the impact,” La Ode, who also serves as the Golkar Party’s Head of Labor and Professional Development Division, said as quoted in a statement on Wednesday, April 16, 2025.

La Ode emphasized that the TKDN policy should be preserved to maintain Indonesia’s competitiveness and industrial independence. He warned that without TKDN protections, the nation could become overly dependent on imported goods.

“By using local products, we drive economic growth because our domestic industries are moving. The TKDN exists to protect them,” he said.

He further asked the government to be committed to developing TKDN by offering incentives for local manufacturers, easing access to financing and technology, and strictly monitoring compliance to ensure the policy is not reduced to a mere formality.

“With strong government support for TKDN products, we could create significant employment opportunities and aim for 8 percent economic growth,” he said.

Currently, the minimum TKDN threshold is set at 25percent, with an additional company benefit score (BMP) requirement of at least 40 percent. The policy is part of the broader effort to increase the use of domestic products (P3DN) in public procurement.

Previously, President Prabowo instructed his cabinet to revise the TKDN regulation, arguing that industrial capacity is linked to broader issues, such as education, science, and technology, and cannot be solved merely through regulatory means.