The renewal of the domestic component level (TKDN) regulation, announced by the Ministry of Industry on Thursday (11/9/2025), is a breath of fresh air for industry players in the country. Especially, to encourageease of doing business.

However, these updates require measured follow-up so that the attractiveness of investment in Indonesia becomes more convincing and attractive to foreign investors.

The Ministry of Industry stated that the issuance of Regulation of the Minister of Industry Number 35 of 2025 concerning Provisions and Procedures for TKDN Certification and Company Benefit Weight (BMP) is a form of deregulation and refreshment of the old rules that have been running for fourteen years.

In addition to officially revoking Minister of Industry Regulation No. 16/2011 on Provisions and Procedures for Calculating TKDN, the new regulation makes changes to 13 important TKDN policy points which are divided into four main pillars. Namely, incentives, simplification, convenience, and speed.

In the incentive pillar, changes are made by rewarding industry players who carry out research and development activities. If previously R&D activities did not get added value, now the reform presents additional TKDN value up to a maximum of 20 percent.

Furthermore, companies that invest in the country also receive incentives in the form of a minimum TKDN value of 25 percent. Meanwhile, the acquisition of the Company Benefit Weight (BMP), which was previously difficult to achieve a maximum of 15 percent, is now easier because there are 15 components that form the BMP value that can be selected.

The second pillar is simplification. If in the past the calculation of TKDN goods was cost-based and carried out with quite complex requirements, now the approach is changed to be simpler without having to calculate the entire cost, except for industrial services.

Materials are also directly assessed for their TKDN value at the second level, and if not, the origin of the goods. The validity period of TKDN and BMP certificates, which was previously only three years, is now extended to five years with a more structured monitoring system.

Third, the pillar of convenience. This reform brings a breakthrough for small industries. If previously their TKDN value was limited to a maximum of 40 percent with a certificate validity period of only three years, now through the self-declaration method small industries can get a TKDN value of more than 40 percent with a certificate validity period of up to five years.

Changes have also occurred in the inclusion of the TKDN value. Previously, consumers had to search for an inventory list of certified goods to find out the amount of TKDN, but now the value is listed directly on the product label and packaging.

For the calculation of R&D, which was previously calculated based on costs, it is now simplified through intellectual aspects. In fact, TKDN certification for industrial services, which previously had no clear procedures, can now be submitted by calculating the cost components of labor, equipment, and general services.

The last pillar is speed. The time required for TKDN certification has also been cut significantly. Certification through the Independent Verification Institute (LVI), which previously took 22 working days, can now be completed in just 10 working days.

Minister of Industry Agus Gumiwang Kartasasmita revealed that the TKDN update is a big step to bring a cheaper, easier, faster, and more transparent system to encourage investment and strengthen the competitiveness of the national industry.

"TKDN reform is an answer to the needs of the business world as well as a tangible manifestation of the government's partiality to the domestic industry. We want to ensure that the Indonesian industry not only survives, but is also able to jump forward and provide tangible benefits to the nation and the people," Agus explained in a written statement received by SUAR, Saturday (13/9/2025).

Implementation determines

This rule update does seem to promise some respite for the industry. However, businesses caution that the TKDN reform is only one component of an overall effort to make Indonesia more attractive to investors. In other words, the TKDN reform is not a one-stop solution to investment problems and the development of industrial competitiveness.

Panasonic Manufacturing Indonesia Vice President Director Daniel Suhardiman acknowledged that the new TKDN regulation provides convenience for entrepreneurs. In particular, for industry players and investors in electronic devices, they have the choice of using the TKDN calculation method. "The new TKDN calculation method is indeed easier than the old calculation method," Daniel said when contacted by SUAR, Saturday (13/9/2025).

"However, this new calculation method also creates new problems, because supporting industries that supply the needs of the main industry must also meet the TKDN criteria, especially raw materials in the electronics industry," Daniel continued.

In line with Daniel, a source from the automotive industry who declined to be named stated that investors need time to react to the implementation of the new TKDN regulation, which is more than 100 pages thick. However, the source confirmed that so far, the TKDN regulation is not the only basis for investment consideration.

"TKDN is not the only parameter for investors. Security stability and consistency of policies / regulations, such as the condition of the government's APBN spending, are still their top priorities for making decisions," the source explained to SUAR, Monday (16/09).

Security stability and policy/regulatory consistency, such as the condition of government budget spending, are still their top priorities for decision-making.

In addition to fiscal policy, according to the source, investors also compare various policies that complement the TKDN provisions. Namely, ranging from business sustainability regulations, environmentally friendly regulations, driving safety regulations, and others.

Reasense smartphone market analyst Aryo Meidianto validates the entrepreneurs' perspective. According to him, the TKDN regulation is a signal to encourage investment and value-added local production. However, the implementation of the regulation can be both an opportunity and a challenge for business players.

"Those who will feel the biggest impact of the TKDN rule update are vendors who have indeed invested in Indonesia, especially in the manufacturing sector," said Aryo when contacted by SUAR, Saturday (13/9/2025).

The key to the success of the TKDN regulation to support industry, according to Aryo, lies in the ease of implementation and the accompanying incentive scheme. So far, the ability of entrepreneurs and investors to fulfill TKDN certification has been a challenge, because the availability of local components has not been optimal. In addition, the certification process is also time-consuming, adding to costs and the risk of production delays.

"If the government is able to provide more support, for example in the form of easy licensing, fiscal facilities, and guarantees of regulatory stability, this TKDN regulation can maintain investor interest while strengthening the local supply chain," he said.