TheJakartaPost
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Go local or risk sanctions
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In coordination: President Joko “Jokowi” Widodo (left) and Vice President Jusuf Kalla (second left) lead a limited Cabinet meeting at the Presidential Office in Jakarta on June 7. (Antara/Rosa Panggabean)
F
rom smartphone to cars and power plants, the government is set to intensify a policy on local content requirement (TKDN) for a wide range of electronic products after proclaiming that it had not been sufficiently enforced.
The government is preparing a regulation that will slap sanctions on companies that refuse to comply with the rule.
The TKDN, first introduced in 2009 to widespread criticism by Indonesia’s major trading partners as it is prohibited by the World Trade Organization (WTO), is aimed at protecting local industries, enhance local innovation and create employment.
Veering away from his commitment to promote market-friendly economic policies, President Joko “Jokowi” Widodo is leading the foray to forge interventionist policies for domestic industries by taking the TKDN regulation to a new level.
During a Cabinet meeting to discuss the implementation of the policy, Jokowi expressed his disappointment over the low use of local content, saying that the policy was merely enforced on paper as a formality to fulfill administrative requirements.
“This is why […] local content must be perceived as a strategic policy that must be implemented, and not just a technical and administrative policy to fulfill requirements in the procurement of goods and services,” Jokowi said sternly prior to a closed-door meeting on Tuesday.
“I hear from many [ministry officials], state-owned firms and other institutions that the policy only serves technical and administrative purposes. The policy is not just meant to minimize imports, but also to boost investments in industries that could substitute imports, which is extremely important.”
