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TKDN Definition, Benefits, and The Calculations Types

What is TKDN?

The domestic Component Level (TKDN) is an important aspect in terms of the domestic supply chain. The ministries responsible for this aspect are the Ministry of Energy and Mineral Resources and the Ministry of Industry. TKDN has an important influence on the marketing and procurement of goods in society, but what is TKDN?

In this article, we will explain the meaning of TKDN and the various calculation components, benefits, and priority sectors in determining TKDN. In addition, it will explain the reasons why the TKDN process for the procurement of goods and services is considered very important.

3 Types TKDN of Calculations

Regarding the definition of TKDN, in the outline, it is the percentage value of various components of domestic production. The production value consists of the cost of transporting an item bidding price of goods and services.

There are three types of components for calculating or evaluating TKDN products and services. This type of calculation is aimed at companies that are required to have TKDN on the goods and services they own. For more details, see the discussion on TKDN calculations below:

1. Calculation of Domestic Components in Goods

This type of TKDN calculation relates to the use of raw materials, design, and build and prioritizes aspects of manufacturing, fabrication, and assembly. However, please note that the requirements for the final completion of the work must originate from and be carried out within the country.

2. Calculation of Domestic Components in Services

The calculation of the next TKDN component is on the service aspect, in which the use of services uses experts, work tools, and the processing process in the country. The work tool means the use of software or software.

3. Calculation of Domestic Components of Goods and Services

The last type is the calculation of the TKDN component of goods and services, which is a combination of the two previous points. Calculation of the use of goods design, manufacturing engineering, and the like combined with the utilization of experts and software. All of these things are done domestically.

Priority Sectors in Determining TKDN

What TKDN is is certainly related to the goals to be achieved. The existence of a TKDN component in each workmanship and fulfillment of goods and services aims to assist government programs to increase components in the country itself.

Therefore, it is not uncommon for several sectors of goods and services to be prioritized in maximizing the application of TKDN. The following are the government’s priority sectors in determining TKDN:

Medical device industry with priority value: >60%

Agricultural equipment or machinery industry, with priority value: >43%

Oil and gas equipment industry, with priority value: >24-40%

The national electricity industry, with a priority value: of>40%

Power generation industry, with priority value: >30-70%

Substation industry, with priority value: >17-65%

5 Benefits of Applying TKDN

TKDN has various benefits for the government and the people of Indonesia. In short, the application of TKDN can minimize imported products and increase the competence of domestic products. For clearer information regarding the application of TKDN, you can listen to the discussion on the following 5 benefits of TKDN:

1. Created New Jobs

The first expected benefit of implementing TKDN in Indonesia is the creation of new jobs. Of course, this is the main concern of the government when it wants to implement TKDN. If new jobs are created, of course, the level of unemployment and poverty in Indonesia will decrease.

New jobs are created because TKDN focuses on utilizing domestic goods and services. In addition, TKDN also aims to increase the use of domestic production. This is, of course, related to the increasing demand for domestic workers.

2. State Foreign Exchange Savings

TKDN is useful for saving the country’s foreign exchange, which has something to do with minimizing dependence on imported or foreign products. Imagine if the Indonesian people were consumptive with imported products; this would hinder the country’s foreign exchange from increasing.

If the government applies TKDN, then government spending will be more optimal and focused on the domestic sector. This will certainly be very beneficial for the country’s foreign exchange reserves, aka the opportunity not to wastefully spend on imported products.

3. Increasing PPh Income

If TKDN is optimized, then it is certain that Income Tax (Income Tax) income will increase. This is because domestically made products are increasing drastically, so TKDN and various sectors for its improvement must be optimized and started to be encouraged in strategic aspects.

4. Support for the Domestic Economy

The fourth benefit of TKDN is the formation of support for the domestic economy. As previously explained, if TKDN is optimal in terms of implementation, various economic and social aspects will improve in quality.

For example, the domestic economy is increasing. Then, Indonesia’s GDP will also increase as the quality of the population from an economic point of view also increases. This certainly makes TKDN a “fresh breeze” for the domestic economy.

5. Increasing the sense of pride in domestic products

Finally, the benefits of TKDN are to increase a sense of pride and trust in domestic products.TKDN Inspection and Consultation give the Indonesian people a sense of confidence in the quality of products from within the country.

This will also affect healthy competition between domestic and foreign products. In short, TKDN will be a reference for increasing domestic products to be equal to international products from a quality aspect.

TKDN in Procurement of Goods and Services

The application of TKDN in the procurement of goods and services in empowering domestic industries is a government effort to increase P3DN (Use of Domestic Products). Therefore, in its regulations, the government requires the use of household products that are used by the following components:

  • Sources of financing originating from the APBN are K/L/PD, in which the APBD is also included in loans or grants from within the country or abroad;
  • Sources of financing originating from the APBN are also intended for BUMN and BUMD through cooperation between the government and the private sector.

The conclusion from the discussion above is that the community also needs to know the meaning of TKDN and its components, application sectors, and various benefits. It is intended that domestic products continue to develop in quality, and there are aspects of society that support them. As the TKDN verification agency appointed by the Ministry of Industry, SUCOFINDO provides TKDN consultation & verification services for various industrial sectors

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