Industry Minister optimistic of 35% import substitution by 2022

Industry Minister optimistic of 35% import substitution by 2022

Industry Ministry Agus Gumiwang Kartasasmita has asked all government institutions utilizing the national budget, regional budget, or grants to use domestic products. (ANTARA/HO-Biro Humas Kementerian Perindustrian)

Jakarta (ANTARA) - Industry Ministry Agus Gumiwang Kartasasmita has said he is optimistic that by 2022, the target of 35-percent import substitution can be achieved given the enthusiastic support from stakeholders.

"With that enthusiasm, it is possible that this country will be able to achieve the 35-percent import substitution target by 2022," Kartasasmita said in a statement issued in Jakarta on Wednesday.

The minister said the high potential for the program to increase domestic use (P3DN) of the government budget must be optimized.

President Joko Widodo has stipulated that spending on domestic products be prioritized in the government's budget from the beginning, he explained. Moreover, there are already policies and regulations that support such statements, he added.

Under Article 86 of Law Number 3 of 2014 on Industry, the government requires ministries, institutions, local governments, state-owned enterprises, and region-owned enterprises to use domestic products for all procurements of goods and services, he noted.

The law is backed by Government Regulation Number 29 of 2018 about Industrial Empowerment, he said.

Article 61 of the regulation stipulates that the procurement of goods and services focus on domestic products with a Domestic Component Rate (TKDN) value and a 40-percent company benefit value, he added.

Moreover, Article 107 elaborates sanctions and punishment for procurement officials who fail to fulfill the obligations specified in the government's regulation, Kartasasmita said.

"Thus, every government institution, either they are ministries, non-ministries, state-owned enterprises, or region-owned enterprises, which uses the national budget, regional budget, or grants, must use domestic products," the minister added.

He said that this effort would not succeed without the support of stakeholders and good system integration.

A P3DN National Team has been formed on the basis of Presidential Decree No. 24 of 2018, he pointed out.

The team monitors the use of domestic products from the planning stage, coordinates, and evaluates the work of other P3DN teams, the minister said.

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It also promotes and expedites information about domestic products, monitors the consistency of the Domestic Component Rate value, and addresses issues regarding the rate value, he added.

The team encourages all stakeholders to form P3DN Teams in their respective agencies, he said.

"The P3DN team is a strategic partner of the P3DN national team," Secretary General of the Industry Ministry Dody Widodo said.

He asked all involved stakeholders to spread the notion or idea so that many more would support the program.

The team also aims to improve the integration of the P3DN information system, starting from the official website (, the P3DN reporting application, the complaint application ( reports), to e-catalogs, he informed.

The government's commitment to making domestic products predominate the local or domestic marketplace is proven by its optimizing P3DN as much as possible through capital and goods expenditure, he said.

Moreover, the potential for capital expenditure for P3DN is pegged at 31 percent of the total national budget for 2021, Coordinating Minister Luhut Binsar Pandjaitan confirmed in Bogor, West Java recently.

"The potential to increase domestic products in national budget expenditure is quite large. Of the total 2021 National Budget of Rp1,954.5 trillion (US$138 billion), the potential for P3DN through capital expenditure and government goods reaches Rp607 trillion (almost US$43 billion)," he revealed.

President Widodo believes that this figure might help increase its use considering the large capital expenditure of state-owned enterprises, he added.

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