Tuesday, 10 June 2014


The Ministry of Industry encourages state-owned and private enterprises to enhance the use of domestic products. During this time, the role of state-owned and private enterprises are not yet maximal in improving this program. Minister of Industry, M.S. Hidayat, in Jakarta on Monday (May 26), said that under the rules that prevail during this time, the pro­gram for increase of use of domestic products (P3DN) is only required for ministries/government agencies/ institutions. And, state-owned and private enterprises cannot be forced to comply with these rules.

The minister admitted that the application of P3DN program on state-owned enterprises is a bit dif­ficult because there are no rules that require it. How­ever, all of it can begin gradually with awareness. He hoped that in the future, state-owned enterprises could further enhance P3DN program to guard against the influx of imports. According to Hidayat, the pro­gram will be effective if all government agencies run the program. As for the community, this program can­not be imposed because it is only an appeal. Society will use domestic products if the domestic industry could improve quality.

The minister also urged state-owned enter­prises, central government and local governments to cooperate with each other in using local products as an appreciation in the strengthening of domestic products. He said that a number of national indus­trial products are considered able to compete with regional and global products. He criticized the policies of the local governments and state-owned enterprises who prefer to buy Chinese products compared to lo­cal products.

According to him, domestic product is consid­ered to have good quality, such as design, price, and competitiveness in the international market. If people love domestic products, the manufacturers will fur­ther improve the quality and design. He considered that domestic product should be used by people so that foreign products did not flood the domestic mar­ket.

He explained that Presidential Instruction No. 2/2009 on the Use of Domestic Products in the Pro­curement of Government's Goods/Services expressly mandates government agencies to maximize the use of domestic products in the procurement of goods/ services financed by state/regional budget (APBN/ APBD), especially for products whose local content has reached a minimum 25% or 40% including Com­pany Benefit Point (BMP).

To support P3DN, the government will impose strict sanctions on officials who violate the regulation on the procurement of goods and services. Secretary General of the Ministry of Industry, Ansari Bukhari, said that there are many regulations governing P3DN. But, these regulations did not specify the rights and obligations of industry players, consumer rights and responsibilities, and the role and authority of the gov­ernment and the sanctions.

Currently, the rules governing P3DN have been set forth in several laws, among other, Law No. 22/ 2001 concerning Oil and Gas which mandates the use of domestic goods and services, Law No. 27/2003 concerning Geothermal, Law No. 30/2009 on Electricity, which more or less stipulates about mandatory use of local products.

And, many regulations regarding local prod­ucts have been issued, such as Presidential Decree No. 8012003 regarding procurement of government's goods and services. The President has issued Presi­dential Decree No. 2/2009 on the use of domestic products in the procurement of government's goods and services. Sanctions are required so that the ap­plication of P3DN can run optimally, so as to improve the competitiveness of products of domestic indus­tries. Article 85 of Industry Act states that for the empowerment of domestic industry, the government shall increases the use of domestic products.

According to Ansari, the mandatory use of domestic products is done according to the amount of domestic components in each good/service as indi­cated by the level of domestic components. Rules and procedures for the calculation of the level of domestic component refer to the regulations stipulated by the Minister of Industry. (E)

Business New - May 28, 2014

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