TKDN Relaxation is Government’s Effort to Keep National Products Productive in the Face of Trump’s Tariff Rules
Jakarta – The Indonesian government is opening up the option to relax the Domestic Component Level (TKDN) regulation on Information and Communication Technology (ICT) sector products originating from the United States (US). This step is being taken as an effort to deal with the imposition of import tariffs imposed by the US, especially for large products such as Apple. Coordinating Minister for Economic Affairs, Airlangga Hartarto, explained that this option is still under discussion and will be decided soon before being brought to the US government.
“So there are considerations related to the sectors they export to Indonesia, including ICT, we are currently reviewing that and we will respond,” said Airlangga, ensuring that Indonesia and countries in Southeast Asia are strengthening their negotiating positions in facing the import tariff policy imposed by the Trump administration.
Deputy Minister of Industry, Faisol Riza, also added that his party is still making adjustments related to the TKDN value that will be applied to products from the US. He said that this option will be part of the discussion that will be brought by Airlangga in the planned meeting in the US. Faisol hopes that this meeting can produce an agreement that is beneficial for Indonesia, especially regarding the reciprocal import tariff imposed at 32 percent on Indonesian products.
However, this relaxation policy has drawn responses from a number of economists, one of whom is Muhammad Rizal Taufikurahman, Head of Macroeconomics and Finance at INDEF (Institute for Development of Economics and Finance). Rizal reminded that the government should not give unilateral concessions in this policy. He emphasized that any relaxation given must be accompanied by firm and binding requirements, such as the obligation to transfer technology and partnerships with local industry players. “The obligation to transfer technology, partnerships with local industry players, and real investment in the development of Indonesia’s digital ecosystem, this must be part of the agreement,” said Rizal.
In addition, Rizal also reminded the importance of strengthening Indonesia’s bargaining position in front of major countries. He suggested that Indonesia not only react to US trade pressure, but also build regional alliances, for example through ASEAN, to strengthen more equal trade relations.
“Instead of reacting to trade pressure from the US, Indonesia should build regional alliances, for example through ASEAN,” Rizal said. This policy, he said, must be part of a long-term vision to strengthen the domestic digital industry, including strengthening human resources and increasing local manufacturing capacity. [^]
