Organization Introduction

What is TKDN?

The Domestic Content Level (TKDN) is an indicator that measures the proportion of value created by Indonesian-made goods and services in a product or service, and is an important policy tool for Indonesia to promote the development of its domestic supply chain. This matter is mainly promoted and implemented by the Indonesian Ministry of Industry and the Ministry of Energy and Mineral Resources, among other relevant authorities.
TKDN has a direct impact on product market access, promotion, and government/public procurement. Its core objective is to support the increase of local product usage (P3DN), support the development of local industries, and reduce society's dependence on imported products.

Policy Requirements and Procurement Orientation

According to relevant regulations from the Indonesian Ministry of Industry, entities using domestically produced products must give priority to selecting...The combined TKDN value and Business Performance Weight (BMP) should not be less than 40%.products.
Products that obtain TKDN certification are usually included in the priority category of the electronic catalog, gaining more convenience and opportunities in government procurement and market access, thereby enhancing the competitiveness of local enterprises.

TKDN Calculation and Composition (3 Types)

Conceptually, TKDN represents the percentage of domestic factors of production. When assessing the TKDN of products and services, it is typically divided into three categories:

1. Goods category TKDN (domestic component)
   It emphasizes raw materials, design and manufacturing, with particular emphasis on manufacturing, processing and assembly processes; and requires that the final project be sourced from and implemented domestically.

2. Service-oriented TKDN (domestic component)
   Focus on the use of domestic experts, tools, and processes during service delivery, including software or programs.

3. Goods + Services TKDN (Combined Calculation)
   In principle, the relevant stages of cargo design, manufacturing engineering and service delivery, including the use of experts and software, should be completed domestically.

   
   

Priority industries and reference TKDN thresholds

To achieve the policy goal of increasing the proportion of domestic factors of production, the government prioritizes and sets TKDN targets in several key industries, commonly including:

• Medical equipment industry：TKDN > 60%

• Agricultural machinery/equipment industry：TKDN > 43%

• Oil and gas equipment industryTKDN approximately 24%–40%

• power industry：TKDN > 40%

• Power generation industryTKDN approximately 30%–70%

• substation industryTKDN approximately 17%–65%

  
  

Key benefits of implementing TKDN (5 items)

1. Create jobsThis will drive the growth of domestic production and service demand, leading to an increase in employment and jobs across the industrial chain.

2. Save national foreign exchangeReduce reliance on imports and decrease foreign exchange expenditures.

3. Increase fiscal revenue such as income taxIncreased domestic output leads to a larger tax base.

4. Support domestic economic growthTo promote industrial upgrading and GDP growth, and enhance economic resilience.

5. Enhance confidence and pride in domestically produced productsEnhance quality awareness and promote healthy competition through certification and evaluation mechanisms.

   
   

The Importance of TKDN in the Procurement of Goods and Services

With the government promoting P3DN, TKDN has become a key indicator in the procurement process of goods and services, especially applicable to procurement activities using the following funding sources:

• National Budget (APBN)Central/local agency (K/L/PD) and local budget (APBD) projects, and related loan or grant funds;

• State-owned enterprises/local state-owned enterprises (BUMN/BUMD)This includes procurement arrangements in models such as public-private partnerships (PPP).

By establishing a clear calculation system, industry thresholds, and procurement guidelines, TKDN translates the "priority use of local products" into an assessable and enforceable standard, helping the government achieve its industrial policy goals and creating more stable market opportunities for local enterprises.