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Just an evaluation: Airlangga responds to proposed local content rule removal

Jakarta Globe - May 31, 2024

Monique Handa Shafira, Jakarta – Chief Economic Affairs Minister Airlangga Hartarto denied Thursday that Indonesia would completely remove its local content rule in manufacturing, saying that the government was only mulling an evaluation.

Indonesia's local content policy mandates manufacturers to have some parts of the components in its production to be produced domestically rather than imported.

According to media reports, Industry Minister Agus Gumiwang Kartasasmita revealed that a minister had proposed to remove the local content rule. Agus did not reveal which minister wanted to remove the rule but he insisted that the policy should remain in place to promote the national industries.

Agus, however, did not mind if the government would adjust the implementation of local content rules in sectors that have been struggling to meet the requirements. Similar evaluations are also necessary if the required local content levels are too low.

Airlangga then gave comments to the media following Agus's statement.

According to Airlangga, the government will assess the local content rules. Airlangga also acknowledged how the policy had been a boon for industries, including steel-making.

"Of course, we will take a look at the policy. The benefits [that the local content policy] brings to the automotive industry are already crystal clear. The same goes for the steel industry as we see its added value growing. It has also benefited both the upstream and downstream sectors of the textile industry," Airlangga told the press in Jakarta on Thursday.

Airlangga said that the government would evaluate the implementation of the local content in each sector – in other words, the policy would not be completely removed. Airlangga added: "So yes, it will be sectoral based."

Source: https://jakartaglobe.id/business/just-an-evaluation-airlangga-responds-to-proposed-local-content-rule-remova