Only 43% of Products in the Government Procurement Catalog are Locally Made

Recently, President Joko Widodo expressed his displeasure with government agencies that predominantly purchase imported goods rather than local products.

"It's foolish if we don't do this (buy local products). Instead, we buy imported goods. Should we continue this? No, we can't," the President said while giving directions at the "Aksi Afirmasi Bangga Buatan Indonesia" event on Friday (March 25).

According to the Ministry of Industry (Kemenperin), only 40,550 local products (43.9%) out of a total of 92,357 products listed in the 2021 Government Goods/Services Procurement Policy Institute (LKPP) catalog are domestically produced.

Of all these local products, only 4.03% have a Domestic Component Level (TKDN) certificate. The remaining 39.88% lack a TKDN certificate.

Presidential Regulation Already Exists Governing Local Product Purchases

In response to the President's anger, the LKPP stated it will freeze imported products in its catalog if domestic substitutes exist.

"So, if goods are already produced domestically, imported ones shouldn't be purchased," said LKPP Head Abdullah Azwar Anas in a press statement on Monday (March 28).

"However, for goods that are not available domestically, such as certain defense equipment that cannot be manufactured (domestically), purchasing them from abroad is permitted," he continued.

Previously, the government issued Presidential Regulation (Perpres) No. 12 of 2021, mandating that at least 40% of the central and regional government budgets be allocated to procurement of goods and services from micro, small, and medium enterprises (MSMEs).

This Perpres also stipulates that procurement projects with a budget ceiling of up to Rp15 billion be allocated to small businesses and cooperatives.