Import Rift Exposes Fault Lines in Indonesia Industrial Strategy

JAKARTA, Investortrust.id — A government-backed plan to import 105,000 pickup trucks worth Rp 24.66 trillion, equal to $1.55 billion, from India for the Merah Putih Village Cooperative program has triggered an escalating policy clash in Jakarta on Sunday, Feb 22, 2026, as trade officials defend open import rules while industry groups warn of damage to domestic manufacturing and jobs. The dispute has exposed deeper tensions in President Prabowo Subianto’s push to balance free trade commitments with an ambitious industrialization agenda.

At the center of the controversy is PT Agrinas Pangan Nusantara, the state firm appointed under Presidential Instruction No. 17 of 2025 to support the rollout of the Merah Putih Village and Urban Cooperatives.

Agrinas moved to procure 35,000 four-wheel-drive pickups from Mahindra & Mahindra Ltd, 35,000 similar units from Tata Motors and 35,000 six-wheel trucks from the same manufacturer, with shipments scheduled throughout 2026 and 200 Mahindra units already delivered.

Trade Minister Budi Santoso said the imports complied fully with existing regulations.

“If it is a car, it is free. Cars do not require an import approval or recommendation,” Budi said recently at his ministry’s office in Jakarta.

Under trade rules, commercial vehicles are not classified as restricted goods and therefore do not require a special import license, known as Persetujuan Impor. Importers only need standard business identification and customs compliance.

Industry Minister Agus Gumiwang Kartasasmita struck a different tone.

“If all pickup needs are met through imports, then economic value added and job absorption will be enjoyed by industries abroad,” Agus said in a written statement on Thursday, Feb 19, 2026. “If those needs are fulfilled domestically, the economic benefits, job creation and strengthening of national industry will also be felt at home.”

Business Groups Close Ranks

The Indonesian Chamber of Commerce and Industry, known as Kadin Indonesia, urged policy synchronization between the Trade Ministry and the Industry Ministry.

“From an administrative trade perspective, large-scale car imports are allowed,” said Saleh Husin, deputy chair for industry at Kadin Indonesia. “However, from an industrial policy standpoint, the government must be cautious so that rural cooperative development does not weaken utilization of domestic automotive factories.”

The Indonesian Employers Association, or Apindo, echoed that concern.

“Given the very large scale of the planned procurement, reaching 105,000 units with a value of around Rp 24.6 trillion, the import policy should be thoroughly evaluated before implementation,” Apindo chairwoman Shinta Kamdani said on Sunday, Feb 22, 2026.

She said domestic pickup production capacity ranged between 400,000 and 1,000,000 units annually, with local content levels above 40 percent, but had been underutilized amid weakening demand.

The Indonesian Automotive Manufacturers Association, or Gaikindo, also rejected claims of insufficient capacity.

“Industry players in Indonesia actually have the capacity to meet that need,” Gaikindo chairman Putu Juli Ardika said on Sunday, Feb 22, 2026.

He said national pickup capacity exceeded 400,000 units per year and could be adjusted to meet specifications, including four-wheel-drive variants, given sufficient preparation time.

A Broader Economic Debate

The controversy has drawn in lawmakers as well. “The President’s aides must correctly interpret and implement the President’s vision,” legislator Rachmat Gobel said on Friday, Feb 20, 2026, arguing that large-scale imports contradicted the administration’s industrialization and job-creation goals.

Indonesia’s automotive industry supports around 1.5 million jobs across its supply chain, spanning tires, glass, batteries, metals, plastics and electronics.

With total vehicle sales in 2025 falling 7.2 percent from the previous year to 803,687 units, industry groups say government procurement could serve as a stabilizing force for factory utilization.

Agrinas has defended the procurement on practical grounds. The company cited domestic pickup output of around 70,000 units per year for certain specifications and argued that diverting supply could disrupt other logistics needs, while imported models offered competitive pricing and features.

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Behind the regulatory debate lies a philosophical divide about the role of the state in shaping markets.

Prabowo’s agenda emphasizes downstream processing, industrial upgrading and economic sovereignty, themes that resonate strongly with business associations calling for local assembly, higher domestic content and partnerships instead of completely built-up imports.

At the same time, Indonesia maintains an open trade framework that allows most vehicle imports without special permits, reflecting commitments to global supply chains and investment flows.

The outcome of the dispute may signal how far the administration is willing to recalibrate trade rules to support industrial priorities.

For now, the 105,000 pickups have become more than vehicles for rural cooperatives.

They have become a test case for how Indonesia balances openness with economic nationalism in the early years of Prabowo’s presidency.