TKDN Indonesia (Tingkat Komponen Dalam Negeri) is a local content regulation requiring products and services, especially in government procurement, to include a portion of Indonesian-made components.
Once seen as a protectionist policy, TKDN has evolved into a strategic tool to boost domestic manufacturing, create jobs, and reduce reliance on imports. It's vital in the energy, automotive, electronics, and digital infrastructure.
This article explains the current rules, how TKDN is calculated, and how recent reforms can benefit your business.
Although TKDN Indonesia aims to boost the local industry, its implementation hasn't been without challenges, such as:
Foreign investors have also raised concerns, citing TKDN as a trade barrier that complicates entry into the Indonesian market.
To address industry feedback, President Prabowo introduced Presidential Regulation No. 46 of 2025, which marks a major shift:
These reforms show that TKDN Indonesia is evolving, from a strict mandate to a strategic tool that rewards real investment in local value creation.
As of 2025, TKDN Indonesia requirements continue to apply to a wide range of industries, especially those involved in government procurement or operating within strategic sectors prioritized by the state, which are:
Companies bidding for public tenders must meet specific TKDN thresholds. Under Presidential Regulation No. 46 of 2025, products with a combined TKDN + BMP (Company Benefit Weight) score of ≥ 40% and a minimum TKDN of 25% are prioritized.
TKDN is mandatory or heavily enforced in industries including:
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Foreign companies (PMA) and tech developers offering products or services to the Indonesian government, especially in industries like health tech, infrastructure, and digital platforms, are increasingly expected to comply with TKDN Indonesia.
This includes software firms bundling platforms with hardware or services. While not always legally required, TKDN compliance is critical for eligibility in public tenders and long-term market access.
TKDN Indonesia still uses the traditional cost-based calculation method. An incentive-based system is under review but not yet active.
TKDN (%) = (Value of Local Content / Total Production Cost) × 100
Components included:
| Cost component | Value (IDR) |
| Local materials & labor | 250,000,000 |
| Imported components | 150,000,000 |
| Total production cost | 400,000,000 |
TKDN (%) = (250,000,000 / 400,000,000) × 100 = 62.5%
The final TKDN score is 62.5%, which qualifies the product for priority status in public procurement under current regulations.
A bonus system is being developed to reward deeper localization efforts as part of the 2025 reforms. These bonuses would boost the TKDN score beyond the base calculation, but this model is inactive.
| Localization activity | Bonus (%) |
| Building a local factory | +15% |
| Hiring Indonesian workers | +10% |
| Partnering with local R&D teams | +5% |
The new TKDN reform isn't just about compliance; it's an opportunity. By aligning with the new rules, businesses can unlock access to public projects, gain a competitive edge, and build stronger ties with the Indonesian market.
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Aligning early helps your company gain a competitive edge while simplifying regulatory compliance.
TKDN Indonesia is evolving into a smarter, more business-friendly policy, but the process can still be complex. Yes, you can do it yourself. The tools and systems are in place. However, if you want to get it done faster, smoother, and with less stress, Ascentium Indonesia is here to help. We can: