Our Case: An LTE Product and the TKDN Question
One of our clients has a product with LTE/4G capability. Since Indonesia’s TKDN regulation applies to LTE/4G devices, they believed a TKDN certificate was required before the product could enter the Indonesian market. Is that really the case?
Permenperin No. 35 of 2025: The TKDN Rulebook
Indonesia’s Ministry of Industry signed Regulation No. 35 of 2025 on the Provisions and Procedures for TKDN and BMP Certification on 11 September 2025. It took effect on 11 December 2025, three months after promulgation (Article 75). It replaced the 14-year-old Permenperin 16/M-IND/PER/2/2011 and three related procurement guidelines (Article 74).
Our Short Answer for the Client
No. Their product did not need TKDN at all. To see why, we need to look at what TKDN measures, who is actually obliged to have it, and which products cannot even apply.
What Is TKDN?
TKDN stands for Tingkat Komponen Dalam Negeri, or local content level. It is defined as the amount of domestic content in goods, services, or a combination of goods and services. Under the regulation, the value can be calculated for three objects:
- Goods (Barang)
- Industrial services (Jasa Industri)
- A combination of goods and services
A TKDN certificate is the official proof of a product’s local content value and/or BMP value. It is issued after calculation and verification by an Independent Verification Body (LVI) appointed by the Minister of Industry. BMP (Bobot Manfaat Perusahaan) is a separate credit awarded to companies that invest and produce in Indonesia.
How TKDN for Goods Is Calculated Under Permenperin 35/2025
The new regulation no longer calculates TKDN on total cost. Article 4 fixes three production factors with set weights.
| Production factor | Weight | When it counts in full |
|---|---|---|
| Direct materials | 75% | Main components hold certified TKDN values above 80%, or are made in Indonesia from fully domestic raw materials (Article 5) |
| Direct labour | 10% | At least 50% of direct workers are Indonesian citizens and production runs in the company’s own factory in Indonesia (Article 6) |
| Factory overhead | 15% | The company has invested in Indonesia and produces in its own factory there (Article 7) |
A main component that is not produced by an industrial company in Indonesia counts as 0% for the materials factor. Companies with active research and development can also earn an additional 20% brainware value (Article 10).
Who Is Obliged to Comply With TKDN?
Government Procurement Is the Main Trigger
Permenperin 35/2025 is a calculation and certification procedure. It does not, by itself, make TKDN a condition for importing or selling a product. The obligation comes from procurement policy. Minister Agus Gumiwang Kartasasmita explained that TKDN applies to all industrial products purchased by the government, BUMN and BUMD through public procurement (PBJ). When a domestic product with a TKDN value above 40% is available, government buyers must choose it over imports. For consumer products outside procurement, displaying a TKDN value is encouraged but voluntary.
Can a Product Be Excluded From TKDN Assessment?
Yes. Article 9(2) lists goods for which TKDN cannot be calculated at all:
- Goods whose raw materials and/or components all come from imports. This is simply because there is nothing domestic to measure.
- Goods produced only through packing or packaging
- Goods produced only through painting, colouring, cutting, slicing or diluting that does not change the HS code
- Goods produced by disassembling components
- Natural goods that undergo no production process
So, What Did We Tell the Client?
No, they did not need a TKDN certificate, for three reasons.
- Not a government procurement product. The device is sold through commercial channels, not to ministries, BUMN or BUMD, so the procurement obligation does not apply.
- Fully manufactured abroad. Every material is produced, and the product is assembled, outside Indonesia. Under Article 9(2)(a), it could not apply for TKDN even if it wanted to.
What the client does need is DJID certification for the LTE and other radio functions.
Key Takeaways
- Ask who the buyer is. Under Permenperin 35/2025, TKDN matters mainly when the product is bought through government, BUMN or BUMD procurement. Commercial retail products have no TKDN obligation.
- Imported goods cannot be assessed. A product made entirely from imported materials and assembled abroad falls under Article 9(2)(a) and cannot receive a TKDN value.