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View all search resultsGovt grants 25% local content boost for building local factories
The new formula introduces a tiered system where companies will receive additional credit for labor and overhead if they produce in-house, and a lower score if they rely on contract manufacturers.
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Industry Minister Agus Gumiwang Kartasasmita addresses a press conference on reforms to local content requirement (TKDN) and corporate benefit certification (BMP) rules on Sept. 12 at the Industry Ministry office in South Jakarta. (Courtesy of/Ruth Dea Juwita)
T
he government will grant investors an immediate 25 percent local content score if they build local manufacturing and hire local workers under a new industry policy aimed to simplify the country’s regulations.
“Once an investor puts money into building a plant and starts production, they automatically secure the 25 percent [score]. This is one of the new ease-of-doing-business measures that did not exist before,” Industry Minister Agus Gumiwang Kartasasmita told a press conference on Thursday.
The new formula introduces a tiered system where companies will receive additional credit for labor and overhead if they produce in-house, and a lower score if they rely on contract manufacturers.
Under the new policy, companies could additionally lift their local content score by 20 percent if they invest in domestic research and development (R&D).
Read also: Economists press Prabowo to fix budget, governance
The local content policy overhaul is part of broader government deregulation efforts, Agus said, responding to business concerns that the previous rules were overly complex and created unnecessary hurdles for companies seeking to participate in public procurement.
Industry Ministerial Regulation No. 16/2011, which governed local content certification, is nullified and replaced by a new incentives-driven framework set out in Industry Ministerial Regulation No. 35/2025, which the minister described as more suited to the needs of a “more complex industrial landscape.”
