Monday, 8 July 2013


The preference for local made products was an enormous potential to support domestic industry. To prefer domestic products means to love one’s own country. Indonesia’s industry must be independent and self-reliant and therefore it was time to reduce export of raw materials; the raw materials must be used at home in Indonesia.

Today the biggest problem faced by Indonesia was invasion of imported products. Ironically, the condition occurred amidst the flaring spirit to enhance industrial competiveness, and securing domestic products. Therefore various measures had been taken to promote use of domestic products among the people. “We must be independent, not relying on imported products.” Panggah Susanto, Director General of basic Manufacturing industry, the ministry of industry stated in Jakarta on Monday [27/5].

Panggah disclosed that government’s spending would be targeted at buying domestic products [P3DN]. This was in parallel with the size of government’s capital expenditure in APBN 2013 which was posted at Rp213 trillion and capital expenditure of BUMN companies of above Rp1, 000 trillion. Pangga remarked that national economy would be strong if expenditure for goods and services were prioritized for domestic products. For that matter, use of local made products by the government must be enhanced, to consider that the government’s policy to use local made products was the last resort in the effort to protect the local industry.

He remarked further that for P3DN program, in fact President SBY had issued Presidential instruction no 2 year 2009 on the use of domestic products for government’s goods and services procurement. In that regulation every ministry and institution were encouraged to use domestic made products in every opportunity. According to panggah, use of domestic products had successfully uplifted performance of domestic industry which by end of last year grew by 6.40%. The growth was higher compared to economic growth of 6.23%.

 Furthermore he explained that the policy to use domestic product in the procurement of goods and services had been written in the regulation of the minister f industry no 15 year 2011, whilst inventory list of 21 goods and services category had been verified. The local content level of domestic component [TKDN] was widely publicized. Panggah stated that the roadmap for strengthening local processing industry had been set up and constantly developed. In 2009, law no 4 on mineral and coal had been issued. The point is that there should be no more export of raw material.

While passing the law, panggah said he would enhance building of infra-structure and facilities supportive to growth of local industry growth like smelters for mineral purification, powerhouse, and infra structure like road. He further remarked that he would develop four basic minerals namely iron and steel, aluminium, nickel, and copper. Of the four mineral types, development of iron and steel were the prioritized project, particularly in developing production capacity from 2.5 tons per year to 6 million tons per year.

Pangga disclosed that every auction for procurement of government’s goods and services, in the event that auction participants had local content level [TKDN] of 25%, the auction would only be exercised by domestic participants. If was mandatory that the goods be used by the ministry/institution. The ministry of industry had recommended extension of the TKDN certificate validity up to 3 years to enhance the PEDN program. (SS) 

Business News - May 31, 2013

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