Head of the Center for Industrial Development and Public Policy Studies (PIKP) ITS Dr Ir Arman Hakim Nasution MEng explained his presentation at the Board of Expertise PP IKA ITS

ITS Campus, ITS News — The Domestic Component Level (TKDN) is the key to restoring the glory of the Indonesian manufacturing industry amidst the dynamics of global retaliatory tariffs or so-called global reciprocity initiated by the President of the United States (US) Donald Trump. This was conveyed by one of the researchers from the Sepuluh Nopember Institute of Technology (ITS) Dr Ir Arman Hakim Nasution MEng.

According to Arman, TKDN is not just a regulation, but a bridge to import substitution and economic independence. “TKDN is a concept of strengthening industry, but its implementation must be flexible and balanced with downstreaming,” said the Head of the Center for Industrial Development and Public Policy Studies (PIKP) ITS in the Board of Expertise Note of the Central Management of the ITS Alumni Association (PP IKA), some time ago.

According to data from the Central Statistics Agency (BPS), before the 1998 reform, the manufacturing industry grew rapidly by 13-14 percent and boosted the national economy to 7 percent. After the reform, manufacturing growth slowed to 3 percent, lowering economic growth to around 5-6 percent. “TKDN is here to protect domestic industry, similar to the reciprocal tariff policy implemented by developed countries such as the US,” Arman added.

Head of the Center for Industrial Development and Public Policy Studies (PIKP) ITS Dr Ir Arman Hakim Nasution MEng reminded about the importance of TKDN for economic independence

The lecturer of the ITS Business Management Department also revealed that high capital costs and obstacles from business and political mafias, including the influence of donor countries, are the main obstacles in making TKDN a success. He gave an example of Freeport’s downstreaming, where levels 3 and 4, namely the assembly industry, are not ready, even though levels 1 and 2, namely raw materials, have been running smoothly.

Amid geopolitical pressure, especially the 32 percent retaliatory tariff policy from the US in the Trump era, Arman emphasized the importance of equality-based negotiations. “Don’t follow the US drum. Reducing dependence on imported goods is crucial so that the nation’s dignity is not mortgaged,” he said, referring to the 90 percent dependence on pharmaceutical raw materials from imports.

The ICSB Asia Chapter Expert Council proposed a number of mitigation solutions, including increasing food imports such as wheat and soybeans through a government-to-government scheme, enforcing anti-dumping regulations, namely imposing import duties on dumped goods or goods sold abroad at lower prices.

Arman also encouraged relaxation of policies such as Export Proceeds Fund (DHE) for Freeport and ethanol imports, while strengthening transparent TKDN. “So that later it can become Indonesia’s strategy in facing the 32 percent reciprocal tariff from the US,” Arman added.

He is optimistic that with the right approach, Indonesia can face global challenges while strengthening economic independence. “With creativity and cooperation in the context of Indonesia Incorporated, there is no difficult problem, as long as the dignity of the nation is upheld,” said the Expert Council of PP IKA ITS as a reminder. (ITS PUBLIC RELATIONS)

Reporter: Harri Raditya Ardianto
Translator : Devinka Mutianeira