All companies supplying goods or industrial services—including those participating in government procurement, SOE projects, or public-funded programs. Non-compliance may lead to disqualification from tenders or administrative sanctions.
On 11 September 2025, the Ministry of Industry of the Republic of Indonesia (MOI) issued MOI Regulation No. 35 of 2025 concerning Provisions and Procedures for Certification of Domestic Component Levels (Tingkat Komponen Dalam Negeri, TKDN) and Company Utilisation Point Ratings (Bobot Manfaat Perusahaan, BMP). This regulation will take effect on 11 December 2025, replacing the previous framework under MOI Regulation No. 16/2011 and MOI Regulation No. 46/2022.
The new regulation seeks to enhance Indonesia’s industrial competitiveness by streamlining the domestic-content certification process and introducing incentive-based scoring for companies that contribute to local development. It also broadens the scope to cover industrial services and mixed goods-service activities. By strengthening verification and extending the validity of certificates to five years, MOI 35/2025 aligns Indonesia’s domestic-content policies with the broader industrial roadmap under Presidential Regulation No. 74/2022 on National Industry Development Policy.
The enactment of MOI Regulation No. 35 of 2025 significantly transforms Indonesia’s industrial compliance landscape. It expands regulatory obligations while simultaneously introducing new avenues for competitive advantage through an incentive-based scoring system. Both domestic and foreign enterprises engaged in manufacturing, services, or mixed-sector operations are expected to be impacted. Moreover, the regulation not only redefines the methodology for calculating domestic content but also reshapes the way companies demonstrate and maintain compliance throughout their business activities.
All entities supplying goods or industrial services to the government, state-owned enterprises (SOEs), or projects financed by public funds are now required to possess valid TKDN and BMP certificates in accordance with MOI 35/2025. Without these certifications, companies will be ineligible to participate in public procurement or industrial tenders. This requirement compels businesses to engage accredited verification institutions (Lembaga Verifikasi Independen or LVI) to ensure their documentation, production data, and supplier inputs accurately reflect domestic-content values. Non-compliance may result in exclusion from future government projects or administrative sanctions.
The new calculation formula (materials 75 %, labour 10 %, and overhead 15 %) mandates companies to restructure their cost composition and reassess the origin of key production inputs. Manufacturers must enhance local sourcing, evaluate their supplier mix, and document each domestic component precisely. Companies dependent on imported materials face increased pressure to localise supply chains or engage local partners to sustain competitive TKDN scores. Failure to optimise cost structures could reduce their domestic-content percentage, jeopardising procurement eligibility or incentive opportunities.
MOI 35/2025 introduces a BMP incentive mechanism, rewarding companies that contribute to Indonesia’s industrial ecosystem through research and development, Industry 4.0 adoption, technology transfer, environmental sustainability, and workforce localisation. Firms meeting these qualitative benchmarks may gain additional BMP points—potentially improving their classification and enhancing their standing in government procurement evaluations. This policy underscores Indonesia’s strategic transition from a protectionist approach toward value-added localization, fostering innovation-driven investments rather than mere assembly-based operations.
While TKDN certificates issued under the previous regulations will remain valid until their respective expiration dates, the transition period nonetheless presents notable compliance challenges. Accordingly, companies currently in the process of certification or renewal must ensure that their submissions fully adhere to the revised provisions prior to 11 December 2025. Any inconsistencies in calculation methodologies, documentation, or procedural compliance may lead to potential rejection or processing delays. Therefore, businesses are strongly encouraged to conduct internal compliance audits, identify affected product lines, and engage proactively with verification institutions to facilitate a smooth transition under the new regulatory framework.
For foreign-invested manufacturers (PT PMA) and multinational suppliers, the regulation necessitates a well-planned localisation strategy. Companies must carefully identify which stages of production can be relocated onshore, reinforce collaborations with Indonesian vendors, and establish transparent, traceable documentation systems. Furthermore, this requirement is particularly crucial in sectors such as electronics, automotive, energy, and infrastructure, where eligibility for projects often hinges on compliance with local-content thresholds. By proactively aligning with these new obligations, companies can preserve market access and enhance their reputation as compliant and locally integrated participants within Indonesia’s industrial landscape.
The enactment of MOI Regulation No. 35 of 2025 marks one of the most significant and comprehensive reforms to Indonesia’s local-content framework in more than a decade. This regulation consolidates previously fragmented ministerial provisions and harmonizes both quantitative (TKDN) and qualitative (BMP) assessments into a single, verifiable system. Moreover, the updated framework is designed to enhance accuracy, promote fairness, and ensure greater policy consistency across all industrial sectors.
Under Article 3 of MOI 35/2025, the regulation applies to:
This broader scope guarantees that industrial services previously excluded under the 2011 and 2022 regulatory frameworks are now encompassed within the domestic-content certification regime. This development underscores the government’s acknowledgment of the vital role that industrial services play as a key driver of national industrial value creation.
Furthermore, sector-specific regulations such as those governing medical devices, electronics, and automotive components will remain in force but must be harmonized with the overarching principles established under MOI Regulation No. 35 of 2025. Accordingly, companies operating within these specialized sectors are required to comply with both the sectoral and general TKDN/BMP provisions to ensure full regulatory alignment and prevent compliance gaps.
MOI 35/2025 refines calculation methodologies for greater transparency and introduces a digitalized certification process integrated through the National Industrial Information System (SIINas). The new procedures are summarised below:
| Key Area | New Provision | Compliance Implication |
| Goods Calculation Formula | TKDN = (Direct Materials × 75%) + (Direct Labour × 10%) + (Factory Overhead × 15%) | Companies must provide detailed breakdowns of material origins, payroll composition, and overhead data supported by accounting records and supplier invoices. |
| Industrial Services Calculation | Weighted by local human-resource costs, tools, and local subcontractor participation. | Service providers must quantify local manpower usage and domestic outsourcing. |
| Mixed Goods-Services Formula | TKDN = (TKDN_goods × % goods value) + (TKDN_services × % services value). | EPC and integrated service providers must ensure proportionate documentation for each component. |
| Research & Development (R&D) Bonus | Up to 20% additional TKDN points granted to R&D-intensive manufacturers or those adopting Industry 4.0 technology. | Creates incentive for innovation-based localisation and technology transfer. |
| Certificate Validity | Extended from 3 years to 5 years. | Longer planning horizon, reduced renewal costs, but ongoing audit obligations. |
| Self-Declaration for Small Industries | Micro and small manufacturers may self-declare TKDN through SIINas, subject to random verification. | Encourages SME participation while maintaining auditability. |
| Digital Submission via SIINas | Centralized platform for registration, verification, and certificate issuance. | Streamlines process, reduces manual paperwork, and allows cross-ministry data tracking. |
The integration of SIINas represents a significant procedural advancement, enhancing traceability and strengthening coordination among relevant government agencies. Furthermore, it allows the Ministry of Industry to effectively monitor compliance trends and ensure data consistency at the national level in real time.
MOI 35/2025 introduces a more structured compliance-enforcement mechanism compared with the previous regime.
Administrative sanctions are now explicitly categorized as follows:
The verification process will be carried out by Independent Verification Institutions (Lembaga Verifikasi Independen – LVI) accredited by the Ministry of Industry. These institutions are responsible for reviewing accounting records, production data, and supplier documentation to ensure compliance with applicable standards. Accordingly, businesses are advised to maintain comprehensive audit trails covering material sourcing, labour expenditures, and local vendor transactions to accurately substantiate their declared domestic-content percentages.
In addition, LVIs will conduct post-certification monitoring throughout the five-year validity period to ensure sustained compliance. Should any inconsistencies arise between the reported and actual TKDN values, such discrepancies may result in the suspension or revocation of certification. Ultimately, this continuous audit mechanism signifies a strategic policy shift from a one-time certification process toward a dynamic, ongoing compliance framework.
To ensure regulatory continuity, MOI 35/2025 provides transitional rules as follows:
Businesses must use this transitional period proactively. Failure to update internal records or supplier declarations could result in non-recognition of TKDN/BMP values and loss of eligibility for public-procurement or incentive programs.
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Moving forward, businesses should expect the issuance of implementing regulations and detailed technical guidelines to provide further clarity on TKDN calculations, verification procedures, and sector-specific scoring systems. In addition, the Ministry of Industry (MOI) is anticipated to enhance the integration of SIINas by incorporating digital verification through accredited LVIs, thereby improving transparency, streamlining processes, and minimizing administrative delays.
In line with the new framework, government and SOE procurement policies are expected to be revised to reflect the updated TKDN and BMP thresholds. As a result, companies should proactively review their supplier certifications, realign local-content targets, and maintain comprehensive, traceable documentation. Furthermore, with increased audits and verification processes anticipated in 2026, early preparation and strong compliance readiness will be essential to ensure continued eligibility and operational stability.
Under MOI Regulation No. 35 of 2025, the enforcement framework has been significantly strengthened to enhance compliance oversight. The Ministry of Industry (MOI) is now vested with broader authority to conduct verification, audits, and impose sanctions on entities that fail to meet TKDN (Domestic Component Level) and BMP (Company Utilization Points) requirements. Moreover, in contrast to the previous regime that primarily focused on pre-certification reviews, the new regulation establishes a continuous compliance and audit mechanism aimed at ensuring data integrity, promoting transparency, and preventing potential manipulation.
Article 33 of MOI 35/2025 sets out a three-tier administrative-sanction system proportionate to the nature and gravity of non-compliance:
| Sanction Tier | Triggering Event | Legal Consequence |
| Written Warning | Minor procedural errors, delayed submission of documents, or non-material inconsistencies in TKDN calculation. | Formal notification requiring correction within a prescribed period (usually 14 working days). |
| Suspension of Certificate | Failure to provide supporting documents during verification, material discrepancy in declared TKDN values, or unrectified procedural breach after a warning. | Temporary suspension of TKDN/BMP certificate. The company is prohibited from using the certificate for tender or licensing purposes until rectified. |
| Revocation & Blacklisting | Intentional misrepresentation, falsified data, or proven manipulation of local-content figures. | Revocation of the certificate, public listing on the MOI blacklist for a defined period, and potential ineligibility for future certification. |
Moreover, sanctions may be imposed cumulatively when violations persist or occur across multiple product lines. Consequently, companies placed on the government’s blacklist are prohibited from reapplying for TKDN/BMP certification throughout the sanction period, thereby substantially restricting their ability to participate in government procurement processes and industrial licensing programs.
For foreign investors, MOI 35/2025 signals Indonesia’s commitment to balancing protectionism with transparency. The inclusion of incentives for R&D, sustainability, and Industry 4.0 adoption demonstrates a policy shift from pure localization to innovation-driven competitiveness.
However, global manufacturers must carefully assess compliance obligations and localization ratios in light of bilateral investment treaties and WTO-consistency concerns. Non-compliance may result in disqualification from public procurement or future industrial incentives. For multinational joint ventures, early integration of TKDN/BMP strategy into operational planning will be essential.
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Based on our analysis, MOI Regulation No. 35 of 2025 constitutes one of the most extensive reforms in Indonesia’s local-content policy over the past decade. Furthermore, it establishes clear, performance-based incentives that promote innovation, domestic capital investment, and industrial participation, while simultaneously reinforcing compliance and governance standards.
The regulation achieves a balanced approach, promoting domestic manufacturing while preserving Indonesia’s appeal to foreign investors. However, businesses should note that the enhanced audit and documentation standards will make compliance more demanding. Early preparation, thorough supplier assessment, and timely consultation with legal advisors are essential to secure and maintain certification effectively
MOI 35/2025 marks a significant shift in Indonesia’s domestic-content policy framework. It modernizes calculation methods, digitalizes certification, extends validity, and introduces incentive-based scoring. As it becomes effective on 11 December 2025, companies must immediately review their TKDN/BMP status, supplier structure, and documentation readiness.
By taking proactive steps to adapt early, businesses can not only minimize potential compliance risks but also strategically position themselves to gain from improved procurement opportunities and government incentives linked to local-content performance.
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“DISCLAIMER: This content is intended for general informational purposes only and should not be treated as legal advice. For professional advice, please consult with us.”
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