Minimum Investment for Marketing 4G LTE Products

The Ministry of Communication and Informatics (Kominfo), through Minister of Communication and Informatics Regulation No. 27/2015, stipulates that all 4G LTE telecommunication products must meet a minimum Domestic Component Level (TKDN) of 30 percent, effective January 1, 2017. Three calculation schemes for TKDN exist in this technology industry. First, fulfilling TKDN through manufacturing aspects (hardware); second, through applications (software); and third, through investment.

The investment scheme allows for TKDN assessment based on the value of new investments made by 4G LTE product manufacturers. Investments of Rp 250-400 billion will receive a 20 percent TKDN value; Rp 400-550 billion (25 percent); Rp 550-700 billion (30 percent); Rp 700 billion-1 trillion (35 percent); and investments exceeding Rp 1 trillion (40 percent).

Recent news indicates that Apple is utilizing the investment scheme to distribute its 4G LTE phones and tablets without relocating a portion of its production activities to Indonesia. Apple's latest product, the iPhone 7, is planned for an imminent launch in Indonesia. Apple's investment proposal for the construction of an innovation center has a 30 percent TKDN portion due to its investment value exceeding Rp 586 billion. Apple has begun realizing this investment commitment through the construction of the innovation center in BSD Green City Office Park, Banten.