automotive

Prabowo Asks For TKDN To Be Relaxed, Automotive Industry Could Be Shaken!

President Prabowo Subianto has asked for the regulation on the domestic component level (TKDN) to be changed to be more flexible. This aims to make Indonesia more competitive than other countries. However, according to experts, the policy will have a negative impact on the national automotive industry. 

Senior automotive observer from the Bandung Institute of Technology (ITB), Yannes Pasaribu emphasized that Prabowo's plan to change the TKDN scheme will shake the national automotive industry. This is because if the policy is enacted, the local automotive market will depend on imports. 

"President Prabowo's instruction to make TKDN flexible will shake the automotive industry by lowering production costs and opening the door to foreign investment, but it also risks increasing dependence on imports if not managed tactically and strategically," Yannes told detikOto, Wednesday (9/4). 

Yannes explained that the flexibility of TKDN can indeed encourage imports of cheap components for a limited time and speed up the production process. However, without a solid strategy such as RnD and mandatory partnerships, jobs could be eroded and Indonesia could be trapped as a consumer of imported products. 

"The point is, the local parts industry must immediately increase its productivity, it can no longer play with business as usual patterns, because if not, then large domestic automotive manufacturers could import cheaper sophisticated components from other countries that are able to produce cheaper parts. 

"To increase its export competitiveness, while the local small component industry is threatened with death and has the potential to result in ongoing layoffs if not saved," he added. 

Previously reported, Prabowo's instruction to review the TKDN regulations in Indonesia was conveyed in an Economic Discussion at Menara Mandiri Sudirman, Central Jakarta. 

"We must be realistic. This forced TKDN will ultimately make us less competitive," Prabowo said recently. 

Prabowo admitted that he agreed if the TKDN regulations were made flexible to make Indonesia more competitive. However, he did not specify the request in question. 

"Please, my assistants, my ministers, come on, be realistic. Please change it, make TKDN realistic," said Prabowo. 

TKDN is regulated in the Regulation of the Minister of Industry (Permenperin) Number 29 of 2017. There are at least 3 investment options as a requirement to fulfill TKDN, namely the manufacturing scheme, application scheme, and innovation scheme. 

TKDN has a very broad scope and is applied in various industries including automotive to fulfill domestic content. 

Tag: Automotive Industry Bandung Institute Of Technology ITB Prabowo Subianto TKDN