Unlocking Opportunities: Understanding TKDN Certification in Indonesia

Indonesia’s commitment to bolstering its domestic industries is exemplified by the Tingkat Komponen Dalam Negeri (TKDN) policy. This regulation mandates a specific percentage of local content in goods and services, especially for those participating in government procurement. Understanding and obtaining TKDN certification is vital for businesses aiming to tap into public sector projects and contribute to Indonesia’s economic growth.

Key Takeaways

1. Understanding TKDN: The Domestic Component Level (TKDN) measures the percentage of local content in products and services, crucial for eligibility in government tenders.
2. Priority Sectors: Industries such as medical devices, agriculture, oil and gas, and energy are prioritized under TKDN regulations.
3. Benefits of TKDN Compliance: Achieving TKDN certification can lead to job creation, foreign exchange savings, increased tax revenue, and enhanced national pride in domestic products.
4. Application Process: The certification involves document preparation, submission through the e-TKDN system, verification by the Ministry of Industry, and potential field audits.

What is TKDN?

TKDN, or Domestic Component Level, quantifies the proportion of local materials, labor, and services in a product or service. Established under Presidential Regulation No. 12 of 2021, which amends Presidential Regulation No. 16 of 2018 on government procurement, the policy emphasizes using domestic products to strengthen local industries and reduce reliance on imports.

Priority Sectors

Several industries are prioritized under the TKDN policy, each with specified local content thresholds:

• Medical Devices Industry: More than 60% domestic content.
• Agricultural Tools and Machinery Industry: Over 43% domestic content.
• Oil and Gas Equipment Industry: Between 24% and 40% domestic content.
• National Electricity Industry: More than 40% domestic content.
• Power Plant Industry: Between 30% and 70% domestic content.
• Substation Industry: Between 17% and 65% domestic content.

These sectors are pivotal to Indonesia’s infrastructure and economic development, making TKDN compliance particularly advantageous for businesses operating within them.

Benefits of TKDN Compliance

Adhering to TKDN requirements offers multiple benefits:

1. Job Creation: Increased demand for local labour enhances employment opportunities and facilitates knowledge transfer.
2. Foreign Exchange Savings: Reducing imports conserves foreign currency reserves, contributing to economic stability.
3. Increased Tax Revenue: Retaining more business operations domestically boosts income tax collections.
4. National Pride: Promoting domestic products fosters a sense of pride and supports local enterprises.

Application Process for TKDN Certification

Obtaining TKDN certification involves several key steps:

• Document Preparation: Gather necessary documents, including company information and details about the products or services to be certified.
• Submission via e-TKDN System: Apply through the online e-TKDN platform, ensuring all information is accurate and complete.
• Verification by the Ministry of Industry: The submitted documents undergo verification, and if needed, a field audit is conducted to confirm data accuracy.
• Issuance of TKDN Certificate: Upon successful verification, the TKDN certificate is issued, enhancing competitiveness in government procurement.

It’s important to note that TKDN is applicable beyond manufacturing, extending to sectors like construction, information technology, and energy, where local resources are utilized in services and infrastructure projects.

How Permitindo Can Assist

Navigating the complexities of TKDN certification can be challenging. Permitindo’s Business License Advisory services offer expert assistance to streamline this process. Our support includes:

• Expert Guidance: Helping you understand TKDN requirements specific to your industry.
• Document Preparation: Compiling and organizing necessary documentation for a successful application.
• Process Navigation: Providing step-by-step support throughout the submission and verification stages.

By partnering with Permitindo, your business can achieve TKDN compliance efficiently, positioning you favourably for government tenders and contributing to Indonesia’s industrial growth. Have questions about TKDN certification? Fill in the form below, and our experts will guide you through the process.