May 29, 2023

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What is TKDN Goods and Services

The Ministry of Industry has the ambition to increase TKDN. Specifically for the telecommunication industry, the Ministry of Communication and Informatics translates this regulation which requires 4G devices to have domestic components. If there are no domestic component elements, then there will be a ban on imports to Indonesia for the producers of the product in question. The Minister of Communication and Informatics, Rudiantara, said that this regulation was made to save the country’s foreign exchange. Based on data from the Ministry of Industry as of August 2014, the import value of handsets in Indonesia has reached $2.1 billion. By implementing the Domestic Component Level (TKDN) regulations, it is hoped that the national industry will grow and reduce imports by 10-15%. Local Industry Local content regulations for the telecommunications industry were rolled out based on the regulations of the Minister of Industry No. 16/M-IND/PER/2/2011 and the Minister of Trade Number 82 of 2012.

In the Ministry of Trade regulations governing the Import Conditions for Cell Phones, Handheld Computers, and Tablet Computers, cellphone manufacturers are required to build factories in Indonesia. This is because so far global cellphone manufacturers are considered only interested in making Indonesia a market without intending to invest by setting up factories. It’s not just 4G mobile devices that must have local components, Rudiantara also said that network device providers used by operators must also have local content. However, the three ministries involved in this regulation have yet to issue an official statement on the amount of TKDN that is targeted to have on network and 4G devices in 2017. This is because, although previously it was widely reported that the required TKDN on mobile devices was 40%, Rudiantara later denied this amount. Industry Reaction In response to this plan, industry reactions varied. The majority of local cell phone manufacturers support this government plan.

Even though they were given a three-year deadline before the TKDN regulations were fully implemented, local vendors considered that incentives were needed to help local producers achieve their TKDN targets, as stated by Marketing Director Advan Tjandra Lianto. Sony, which in value terms is now the second largest vendor in Indonesia, also stated that until now it had yet to coordinate further with the government regarding the TKDN regulations. However, Marketing Manager for Sony Mobile Indonesia, Ika Paramita, said that his party was ready to follow these regulations and did not rule out the possibility of having to build a factory in Indonesia. Janto Djojo, Chief Marketing Officer of Wiko Indonesia, when asked about TKDN, said that his party supports this government move. As a newcomer, this French cellphone vendor also plans to fulfill the TKDN element. Starting from collaborating with local developers to create software or applications, to planning to build their own factory here. Calculation of TKDN In the regulation it is stated that the calculated domestic component consists of components of goods and services. For goods components, based on these rules, there are several things that can be taken into account. Among them, raw materials, design, manufacture engineering, fabrication, assembly, and final work whether done and originating from within the country or not. For service components, which can be calculated from the nationality of the service actor, which is calculated from the start of manufacture to the final delivery to the consumer. This includes manufacturing workers, experts, work and production tools which are viewed based on ownership, software, and other supporting facilities. Lenovo Indonesia Country Head Smartphone Division Adrie R.

Suhadi also mentioned that to complete TKDN elements, it has been calculated starting from packaging, hardware, software and applications. Outside the factory, Lenovo itself will work with local developers to develop applications. Although this has not been implemented at this time. Another thing that is calculated in TKDN is calculating service matters. For example, by hiring local employees or opening an after-sales service center with local experts, this is included in the TKDN calculation. Misguidance Misguidance often occurs in the calculation of the domestic component level. This is because TKDN is not only calculated from the percentage of hardware originating from Indonesia compared to the total production of the cell phone. However, there are several other components that are also taken into account in TKDN, such as software and the use of local employees in the distribution chain. This is as stated in the Ministry of Industry regulations as previously mentioned. Another mistake related to this issue is that TKDN does not only end with low selling prices to customers. Rather stimulate the growth of the domestic industry. As has been done by several local handset manufacturers who have started building assembly factories in Indonesia, such as Advan, Evercoss, and Polytron. Cheap prices by requiring TKDN are still difficult, due to the absence of a component industry in the country. So it’s no wonder that most of the hardware such as chips, circuit boards, and other steps needed to make cellphones have to be imported. For this reason, Tjandra assessed that to accelerate the achievement of TKDN, incentives also need to be carried out to spur the growth of component producers in Indonesia. With the availability of local components, it will make it easier for producers to achieve the TKDN target set by the government

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