The Indonesian government recently banned the distribution of the iPhone 16 due to its failure to meet the required Domestic Component Level (TKDN) threshold of 35%. This policy serves as a stern reminder to all local and international manufacturers of the importance of contributing to the development of domestic industries.
However, the iPhone 16 is not the only TKDN-related issue in the spotlight. Previously, the tactical vehicle Maung Pindad, used by “RI 1” (the President), became a success story in fulfilling TKDN requirements. According to Chief of Presidential Staff Anto Mukti Putranto, while 30% of Maung’s components were sourced from Korean and German manufacturers, namely SsangYong and Mercedes-Benz, the remainder was developed locally.
So, who is obligated to comply with TKDN regulations? How can Intellectual Property (IP) certificates help meet these requirements? Let’s dive into the details.
Legal Basis of TKDN
TKDN refers to the percentage of goods or services derived from domestic components in a product, service, or combination of both. This policy is governed by Minister of Industry Regulation No. 16 of 2011, which outlines the rules and methods for calculating TKDN. At least three parties are required to comply with TKDN regulations:
- Electronics and Telecommunications Manufacturers:
Products like smartphones with 4G/5G technology must have a minimum TKDN value of 35%, as stated in Minister of Industry Regulation No. 22 of 2020 on Electronics and Telematics TKDN Calculation Guidelines. - Goods/Services Providers for Government Projects:
Under Presidential Regulation No. 16 of 2018 on Government Procurement, all government-procured goods/services must prioritize products with high TKDN values. - Strategic Industries:
For example, battery electric vehicles (BEVs) are regulated under Minister of Industry Regulation No. 6 of 2022, which specifies development roadmaps, specifications, and TKDN calculation requirements.
Intellectual Property & TKDN Calculation Framework
Factors influencing a product’s TKDN value include:
- Type of Product and/or Service:
Different products have unique parameters and calculation weights, such as manufactured goods, technology, or services. - Local Components Used:
The greater the proportion of raw materials or services sourced domestically, the higher the TKDN value. - Contribution of Certification and Local Innovation:
Intellectual Property certificates, SNI (Indonesian National Standard), and Halal certification can increase the domestic component value.
It can be concluded that owning IP Certificates, such as Patents, Trademarks, and Industrial Designs, allows businesses to count these as part of the Domestic Component (KDN).
The varying needs of industries and technical specifications result in differing TKDN standards. For instance, electronic products like smartphones require a minimum TKDN value of 35%, whereas strategic industrial products like electric vehicles involve more complex parameters, including design and testing.
Specifically for the iPhone, Apple previously held a TKDN certificate, but its validity period has expired. To renew it, the government still deems the latest investment made in educational facilities insufficient. Apple would need to establish larger manufacturing plants and research development centers to meet the requirement.
Requirements for Meeting TKDN Standards
To obtain TKDN certification, businesses must fulfill the following requirements:
- Company Legal Documents:
Articles of incorporation and business licenses. - Intellectual Property Certificates:
Relevant patents, trademarks, or industrial designs. - Quality Management System:
Certification such as ISO 9001:2015. - Proof of Local Components:
Cooperation contracts with local suppliers or invoices for locally sourced raw materials. - Verification Body Appointment Letter:
Only independent bodies designated by the Ministry of Industry can conduct TKDN verification.
TKDN as a Strategic National Policy
From its requirements and objectives, TKDN is not just a regulation but a strategic national policy to strengthen domestic industries. Similar policies exist in other countries, such as:
- Buy American Act in the United States;
- Industrial and Regional Benefits in Canada;
- Local Content Policy in Brazil;
- Local Content Requirement in the European Union;
- Make in India in India; and
- China’s Indigenous Innovation Policy in China.
This long-term policy to enhance Indonesian products’ competitiveness in local and global markets deserves our full support.
Does your product meet the required TKDN standards? Don’t hesitate to consult us about registering your Intellectual Property as part of TKDN compliance. Contact us via email at [email protected].
