Indonesia Overhauls Local Content Rule TKDN to Boost Industry, iPhone 17 Among First Beneficiaries
Key Takeaways
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JAKARTA, Investortrust.id — Indonesia has launched a sweeping reform of its local content requirement, known as TKDN, with the Ministry of Industry introducing new rules that provide investment incentives, research and development credits, and streamlined certification.
The changes, set out in Minister of Industry Regulation Number 35 of 2025, mark a significant shift in industrial policy aimed at making the domestic manufacturing ecosystem more competitive, inclusive, and globally connected.
The reform arrives with immediate impact. On Thursday, Sept. 11, 2025, Minister of Industry Agus Gumiwang Kartasasmita announced the overhaul, while the following day Apple secured TKDN certification for four iPhone 17 models, enabling their launch in Indonesia as early as October.
R&D and Investment Incentives
One of the most notable features of the new regulation is the recognition of research and development activities as part of local value creation. For the first time, R&D can contribute up to 20% of a company’s TKDN score, shifting the focus beyond production costs to innovation.
Companies that invest in local facilities also automatically secure a minimum TKDN score of 25%, regardless of production breakdown. Minister Agus said this incentive is designed to attract more multinational investment into Indonesia’s supply chain. “Reform is built upon four pillars—insentives, simplification, ease, and speed—which have resulted in 13 fundamental changes,” he said in Jakarta.
Simpler and Faster Certification
The reform also simplifies the certification process. Previously, TKDN calculations were based on complex cost accounting, requiring companies to detail all layers of production. Now, only primary components are considered, making compliance easier to understand and apply.
The validity of TKDN certificates has been extended from three to five years, giving businesses longer certainty. Processing times have been cut sharply: certification through independent verification bodies now takes just 10 working days, down from 22. For small enterprises using self-declaration, approval is granted in as little as three days.
Inclusion of Small Enterprises
Small businesses stand to benefit most. Through the self-declare mechanism, SMEs can claim TKDN values exceeding 40%, well above the previous maximum. Longer certificate validity and reduced administrative burden are expected to open the national supply chain to a wider base of local producers.
“This reform is not only about easing costs but also about inclusivity,” Agus said. “We want small enterprises to have a bigger role in the industrial ecosystem.”
iPhone 17 First to Qualify
The impact of the new policy was felt immediately in the technology sector. On Friday, Sept. 12, 2025, the Domestic Product Utilization Enhancement Center (P3DN) confirmed that four iPhone 17 variants—iPhone 17, iPhone Air, iPhone 17 Pro, and iPhone 17 Pro Max—had secured TKDN certification with a score of 40%.
Heru Kustanto, head of P3DN, said the final step before Apple can sell the devices domestically is obtaining Postel certification from the Ministry of Communication and Digital Affairs, a process expected to take no more than two weeks. “By early October, iPhone 17 should be ready for Indonesian consumers,” he noted.
This is a marked improvement compared to the iPhone 16, which entered the Indonesian market in April 2025—seven months after its global release—due to certification delays.
Clarification on Trade Politics
Agus stressed that the TKDN reform had nothing to do with U.S. President Donald Trump’s import tariff policy, which took effect on April 1, 2025. He said the review of Indonesia’s TKDN regime began in March 2024, well before Trump’s election victory.
“Revisions were initiated long before the tariff announcements. This policy is not under external pressure,” Agus told reporters. He added that the new framework replaces Minister of Industry Regulation Number 16 of 2011, which had been in place for 14 years and was no longer suitable for today’s industrial needs.
Economists’ Criticism
While the government promotes the reform as inclusive and business-friendly, several economists remain skeptical. A joint recommendation from the Indonesian Economists Alliance argued that rigid TKDN requirements have historically increased production costs, reduced competitiveness, and even created opportunities for corruption.
Studies by the Economic Research Institute for ASEAN and East Asia (ERIA) and the Center for Strategic and International Studies (CSIS) in 2023 found that strict local content rules discouraged investment, lowered industrial productivity, and risked violating World Trade Organization standards.
The alliance called for a more flexible approach, especially in sectors where domestic suppliers are not yet competitive. “Rigid TKDN creates inefficiency, higher prices for consumers, and distortion of resource allocation,” the group said, recommending reforms that focus on human capital development, technology transfer, and infrastructure.
Toward a Balanced Approach
The debate underscores the dual challenge facing Indonesia: building a strong domestic industrial base while remaining competitive in global trade. The government has attempted to strike this balance by making TKDN more innovation-friendly, faster to certify, and inclusive of small businesses. Yet critics warn that unless rules are implemented transparently, they may still burden companies and open loopholes for rent-seeking.
For now, the reform provides Apple and other multinationals with a clearer path to market, while giving local industries stronger incentives to innovate. Whether this new framework enhances Indonesia’s long-term competitiveness remains to be tested.
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