Demonstrating Corporate Credibility Through a Professional TKDN Verification Agency

TKDN verification agency (Verification Agency) is responsible for verifying and confirming the TKDN achievement values self-calculated by goods/service providers. The verification result is an important basis for the Indonesian Ministry of Industry to issue the TKDN certificate . The agency can verify the domestic component of goods, services or a combination of goods and services . Beyond meeting regulatory compliance requirements, TKDN verification is also significant for economic development, for example by reducing reliance on imports and driving employment growth. As domestic industry continues to produce, a more complete local supply chain will form, encouraging suppliers to build factories and invest in Indonesia. At the same time, the government sets minimum TKDN thresholds for different industries to guide industry in reducing import reliance across production areas. Definition and types of TKDN TKDN (Domestic Component Level) refers to the percentage of production-factor value formed within Indonesia in a good or service (or a combination of the two), expressed as a percentage. The calculation also incorporates elements such as the transportation costs included in the quotation for goods and services. In many government and institutional procurements of goods and services, TKDN is often one of the important preference indicators affecting award and selection decisions, used to maximize the share of domestic products. For manufactured products, policy permits a certain proportion of imported components, while setting minimum TKDN values to promote localization capacity and export competitiveness. TKDN is generally divided into three types: 1) Goods TKDN Calculated by comparing the 'finished product price' with the 'cost of foreign components.' The finished product price is usually based on the production cost structure, including: direct material costs direct labor costs factory overhead 2) Service TKDN Calculated by comparing the 'total service price' minus the 'foreign service price.' The total service price refers to the costs incurred to deliver the service, usually calculated up to the on-site work location. 3) Combined goods-and-services TKDN Based on the 'combined total price' of goods and services, deducting the 'combined price of foreign goods and foreign services,' and then comparing. The valid signatory of the TKDN certificate and/or BMP verification results is the relevant official designated by the Ministry of Industry through its Secretary-General on behalf of the Minister of Industry. What does the TKDN calculation include? When carrying out its work, the TKDN verification agency assesses the technical and cost elements of the product/service, and calculates them together with the BMP (Bobot Manfaat Perusahaan, Company Benefit Weight) . Common components include: 1) Item components Covers the use of raw materials, design and engineering. Engineering usually involves manufacturing, fabrication, assembly and final completion, with emphasis on the relevant work originating from and being carried out within Indonesia. 2) Service components Refers to the whole process from service provision to final delivery, with a focus on verifying the use of resources and capabilities within Indonesia, such as: labor (including experts) work tools (including software tools) supporting facilities and resources with the relevant service activities carried out within Indonesia. 3) Combined goods-and-services components Comprehensively assesses the whole process from raw materials, design, manufacturing engineering, fabrication and assembly to completion, including service elements such as expert services, software tools and supporting facilities. Overview of the TKDN verification process To ensure that industry complies with established regulations, the government verifies the TKDN value of goods/services and the BMP, carried out directly by the TKDN verification agency . The verification usually covers: production stages and production processes machinery and equipment used direct and indirect labor factory overhead (such as electricity, gas, telephone, etc.) The overall cycle is relatively short; for some industries, verification may take only about 5 working days . Enterprises usually need to: Submit a certification application Data reporting : self-entered through the National Industrial Information System SIINas (Sistem Informasi Industri Nasional) Await the agency's assessment and calculation results For convenience, the Ministry of Industry also allows enterprises to self-assess first and submit their self-assessment results through SIINas for verification and confirmation. Why do SMEs also need TKDN verification? TKDN verification applies not only to large manufacturers but also to SMEs. Completing verification helps raise an enterprise's credibility at the societal and local-government level, and gives it more advantages in procurement and market opportunities. Startups or newly established enterprises can also submit applications to a designated verification agency early on to establish compliance and brand endorsement. Enterprises may apply for verification to a government-designated agency. Relevant documents usually need to be prepared and submitted, such as the articles of association, company registration certificate and production report for the most recent year (subject to the agency's actual requirements).