Indonesia Domestic Product Spending
As Indonesia looks towards a self-sufficient economy, its government is implementing policies which are creating challenges for importers.
The Indonesian Government is mandating ministries/institutions and regional governments to allocate 40 percent of their budget to purchase local products.
Indonesia issued the Instruction of President of the Republic of Indonesia Number 2 of 2022 on the Acceleration of Increasing the Use of Domestic Products and Products of Micro, Small Business, and Cooperatives in the Context of the Success of the Proud National Movement Made in Indonesia (Indonesian acronym “Gerakan Nasional Bangga Buatan Indonesia” or BBI National Movement) in the implementation of the Government Procurement of Goods/Services.
There are several points of the President’s instructions in Presidential Instruction 2/2022:
- Stipulate or revise policies/regulations to accelerate domestic product use intensification and empowerment of micro-enterprises, small enterprises, and cooperatives.
- Plan, allocate, and realize government goods/service procurement using domestic products in ministries/institutions and regional governments.
- Plan, allocate, and realize at least 40 percent of the goods/service spending budget for micro-enterprise, small enterprise, and cooperative products resulting from domestic production.
- Support the achievement of the 2022 State Budget and Regional Budget spending target of at least IDR 400 trillion for domestic products with micro enterprise, small enterprise, and cooperative products as the top priority.
- Establish Domestic Product Use Intensification (P3DN) Team at ministries/institutions and regional governments.
- Formulate a strategy roadmap to intensify the use of domestic, micro-enterprise, small enterprise, and cooperative products, including a roadmap to increase the number of domestic products to one million products displayed on the Electronic Catalogue (e-Catalogue).
- Deliver a program to reduce imports to 5 percent by 2023 for ministries/institutions and regional governments that still spend on imported goods/services.
- Use domestic products with a Domestic Component Level (TKDN) of at least 25 percent if domestic products have a total TKDN and Company Benefit Weight values of a minimum of 40 percent.
- Boost display acceleration of domestic, micro-enterprise, small enterprise, and cooperative products on Sectoral Catalog/Local Catalog.
- Announce all government spending for goods/service procurement on the Public Procurement Plan Information System (SiRUP) of the National Public Procurement Agency (LKPP) and fill e-Contract on Electronic Procurement System (SPSE).
- State the requirement to use domestic products and products of micro enterprises, small enterprises, and cooperatives/small and medium industries (SMI)/artisans on all cooperation contracts.
- Remove requirements that hinder the use of domestic products and products of micro-enterprises, small enterprises, and cooperatives in government goods/service procurement.
- Change manual procurement process into electronic procurement process by 2023 at the latest.
- Collaborate with ministries/institutions and regional governments to empower micro enterprises, small enterprises, and cooperatives by making their products a part of the global supply chain industry.
- Provide price preferences in government goods/service procurement to purchase domestic products with a TKDN value of at least 25 percent under laws and regulations.
- Integrate data and information on domestic products and products of micro-enterprises, small enterprises, and cooperatives through One Data Indonesia (SDI) implementation to support data-based policies in government goods/service procurement under the framework of the Electronic-Based Government System (SPBE).
Presidential Instruction 2/2022 is anticipated to build momentum for accelerating domestic product spending.
For more information, please kindly contact: Commercial Specialist Mrs. Pepsi Maryarini (Pepsi.Maryarini@trade.gov)