Impact of TKDN Policy Relaxation on Market Access for US Industrial Products in Indonesia

DOI

10.2991/978-94-6239-709-5_159How to use a DOI?

Keywords

Local Content Requirement; Reciprocal Trade Agreement; Industrial Policy; Indonesia; United States

Abstract

The Reciprocal Trade Agreement between Indonesia and the United States marks a crucial turning point in Indonesia’s industrial and trade policy. This agreement fundamentally alters the competitive landscape by granting an exemption to US-origin companies and products from the obligation to comply with the Local Content Requirement, a protectionist policy that has long been a pillar of Indonesia’s industrialization strategy. This research analyzes the multifaceted impacts of this TKDN relaxation. Using a mixed-methods approach that combines regulatory analysis, economic impact assessment, and a political economy theoretical framework, this paper examines the consequences of this policy shift on market access for US industrial products, the competitiveness of Indonesia’s domestic industry, and the dynamics of the bilateral relationship between the two countries. The main findings indicate that while the TKDN exemption significantly enhances market and competitive advantage for US industrial products, particularly in the information and communication technology and medical device, it simultaneously creates substantial competitive challenges for Indonesia’s domestic component and manufacturing industries. The resulting impact is bifurcated: on one hand, there are potential macroeconomic benefits through increased investment and the availability of quality products for consusmers; on the other hand, there is a risk of de industrialization and the weakening of local supply chains. This paper concludes that this preferential TKDN relaxation not only reflects a strategic concession under geopolitical pressure but also forces Indonesia to undertake a fundamental recalibration of its industrial development model at the crossroads of economic sovereignty and integration into global value chains.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Muhammad Ammar Haitsam Rusly
AU  - Julius Jilbert
PY  - 2026
DA  - 2026/06/20
TI  - Impact of TKDN Policy Relaxation on Market Access for US Industrial Products in Indonesia
BT  - Proceedings of the 10th International Conference on Accounting, Management, and Economics (10th ICAME 2025)
PB  - Atlantis Press
SP  - 2275
EP  - 2289
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-709-5_159
DO  - 10.2991/978-94-6239-709-5_159
ID  - Rusly2026
ER  -