What are the types of TKDN, and which industries have TKDN thresholds?

TKDN is expressed as the 'percentage of domestic production factors,' and assessments fall into three types: goods TKDN (focused on raw materials, design and manufacturing, emphasizing that fabrication, processing and assembly be completed domestically), service TKDN (focused on the use of domestic experts, work tools such as software, and processes during service delivery), and combined goods-and-services TKDN. The government sets TKDN targets in priority industries, commonly including: medical devices TKDN over 60%, agricultural machinery/equipment over 43%, oil and gas equipment about 24%-40%, electricity over 40%, power generation about 30%-70%, and substations about 17%-65%. The main benefits of implementing TKDN include creating jobs, saving national foreign exchange, increasing fiscal revenue, supporting economic growth, and boosting confidence in domestic products.

Indonesia's Domestic Component Level (TKDN) Certification Explained

The Domestic Component Level (TKDN) is a metric measuring the share of value created by locally sourced Indonesian goods and services within a product or service, and is a key policy tool for building Indonesia's domestic supply chains, driven mainly by the Ministry of Industry and the Ministry of Energy and Mineral Resources. TKDN directly affects market access, promotion and government/public procurement, with the core goals of supporting greater use of domestic products (P3DN), nurturing local industry and reducing reliance on imports. Under the rules, users of domestic products should give priority to products whose combined TKDN value and Company Benefit Weight (BMP) is at least 40%, and TKDN-certified products can usually enter the priority category of the e-catalog.

What is TKDN? The Domestic Component Level (TKDN) is a metric that measures the share of value created by locally sourced Indonesian goods and services within a product or service, and is an important policy tool for advancing the development of Indonesia's domestic supply chains. It is driven mainly by authorities such as the Ministry of Industry and the Ministry of Energy and Mineral Resources. TKDN has a direct impact on a product's market access, promotion and government/public procurement. Its core goals are to support increased use of domestic products (P3DN), to nurture the development of local industry, and to reduce society's reliance on imported products. Policy requirements and procurement orientation Under the relevant regulations of Indonesia's Ministry of Industry, entities using domestic products should give priority to products whose combined TKDN value and Company Benefit Weight (BMP) is at least 40% . TKDN-certified products can usually enter the priority category of the e-catalog, gaining more convenience and opportunities in government procurement and market matching, and thereby strengthening the competitiveness of local enterprises. Calculation and composition of TKDN (3 types) Conceptually, TKDN is expressed as the 'percentage accounted for by domestic production factors.' When assessing TKDN for products and services, it is generally divided into three types: Goods TKDN (domestic component) Focuses on stages such as raw materials, design and manufacturing, with particular emphasis on manufacturing, processing and assembly; it also requires that the final completion of the work originate from and be carried out domestically. Service TKDN (domestic component) Focuses on the use of domestic experts, work tools and processes during service delivery, where work tools include software or programs. Combined goods-and-services TKDN (integrated calculation) Combines the elements of goods design, manufacturing engineering and service delivery, including the use of experts and software, with the relevant stages carried out domestically in principle. Priority industries and reference TKDN thresholds To achieve the policy goal of raising the share of domestic factors, the government gives priority to certain key industries and sets TKDN targets for them, commonly including: Medical device industry : TKDN > 60% Agricultural machinery/equipment industry : TKDN > 43% Oil and gas equipment industry : TKDN about 24%-40% Electricity industry : TKDN > 40% Power generation industry : TKDN about 30%-70% Substation industry : TKDN about 17%-65% Main benefits of implementing TKDN (5 items) Creating jobs : drives growth in domestic production and service demand, boosting employment and supply-chain positions. Saving national foreign exchange : reduces reliance on imports and cuts foreign-exchange spending. Increasing income tax and other fiscal revenue : expanded domestic output raises the tax base. Supporting domestic economic growth : promotes industrial upgrading and GDP growth, and strengthens economic resilience. Boosting confidence and pride in domestic products : raises quality perception through certification and assessment mechanisms, promoting healthy competition. The importance of TKDN in goods and services procurement Against the backdrop of the government's push for P3DN, TKDN has become a key indicator in the procurement of goods and services, particularly for procurement using the following funding sources: State budget (APBN) : central/local agency (K/L/PD) and regional budget (APBD) projects, as well as related loan or grant funds; State-owned/regional state-owned enterprises (BUMN/BUMD) : including procurement arrangements under public-private partnership (PPP) and similar models. Through a clear calculation system, industry thresholds and procurement orientation, TKDN turns the principle of 'prioritizing the use of domestic products' into an assessable, executable standard, helping the government achieve its industrial-policy goals while creating more stable market opportunities for local enterprises.

FAQ

What is Indonesia's Domestic Component Level (TKDN) certification?: The Domestic Component Level (TKDN) is a metric measuring the share of value created by locally sourced Indonesian goods and services within a product or service. It is a key policy tool for building Indonesia's domestic supply chains, driven mainly by the Ministry of Industry and the Ministry of Energy and Mineral Resources. TKDN directly affects a product's market access, promotion and government/public procurement, with the core goals of supporting greater use of domestic products (P3DN), nurturing local industry and reducing reliance on imports. Under the rules, users of domestic products should give priority to products whose combined TKDN value and Company Benefit Weight (BMP) is at least 40%, and TKDN-certified products can usually enter the priority category of the e-catalog.
What are the types of TKDN, and which industries have TKDN thresholds?: TKDN is expressed as the 'percentage of domestic production factors,' and assessments fall into three types: goods TKDN (focused on raw materials, design and manufacturing, emphasizing that fabrication, processing and assembly be completed domestically), service TKDN (focused on the use of domestic experts, work tools such as software, and processes during service delivery), and combined goods-and-services TKDN. The government sets TKDN targets in priority industries, commonly including: medical devices TKDN over 60%, agricultural machinery/equipment over 43%, oil and gas equipment about 24%-40%, electricity over 40%, power generation about 30%-70%, and substations about 17%-65%. The main benefits of implementing TKDN include creating jobs, saving national foreign exchange, increasing fiscal revenue, supporting economic growth, and boosting confidence in domestic products.

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