Indonesia-US Economic Cooperation Boosted
Indonesia Eyes Tariff Cuts and TKDN Reforms to Boost Trade
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Indonesia is actively pursuing a dual strategy of reducing import tariffs and reforming its domestic component (TKDN) regulations to stimulate trade and attract investment. These moves come as the nation navigates complex global economic landscapes and seeks to enhance its competitiveness.
Tariff Reduction Negotiations Underway
Indonesia is currently engaged in negotiations for a potential reduction of its 19 percent import tariff on select goods. the aim is to bring these tariffs down to near zero percent, a move that could significantly boost trade volumes and make imported goods more accessible.
“Ongoing negotiations are currently underway for a possible reduction in the 19 percent import tariff on select Indonesian goods, with the possibility of lowering it to nearly zero percent,” a government official stated during a press conference in Central Jakarta on Thursday, July 24, 2025. The new tariff structure will only be implemented onc these crucial negotiations are finalized.
This initiative is part of a broader effort to streamline trade processes and foster a more favorable surroundings for businesses operating within and with Indonesia.
Sector-specific Exemptions and Compliance
It’s important to note that any tariff exemptions will be sector-specific.”The exemption applies only to certain sectors such as telecommunications, facts and dialog, data centers, and medical equipment, and must still comply with technical import regulations,” the official clarified. This targeted approach ensures that the benefits of tariff reductions are channeled towards industries deemed critical for national development and technological advancement.
TKDN Regulation Reforms on the Horizon
In parallel with tariff negotiations, the Ministry of Industry has announced plans to revise the existing TKDN regulations. These regulations, which mandate a certain percentage of locally sourced components in goods sold in Indonesia, are a cornerstone of the government’s industrial policy.
alexandra Arri Cahyani, Head of the Public Relations Bureau at the Ministry of Industry, emphasized that the upcoming revisions are not solely focused on the United States. “This is not solely about the United States. Many other countries and products are involved.If we only focus on the US, that woudl be discriminatory,” she explained on Monday, July 28, 2025.
The ministry intends to issue the updated TKDN policy through a new ministerial regulation. This revision is expected to address current market dynamics and ensure that TKDN requirements remain relevant and supportive of both local industry growth and international trade partnerships. The goal is to create a more balanced and effective framework that encourages local manufacturing while remaining open to global collaboration.
alfitria and Fip contributed to the writing of this article.
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