According to www.kompas.id, Indonesia’s domestic auto component industry is urging BYD and VinFast to establish local supply chains, citing the government’s phased rollout of an 80% domestic component content (TKDN) requirement for electric vehicles (EVs) — set to take full effect by 2026.
Government Policy Drives Local Sourcing Mandate
The Indonesian government is leveraging regulatory instruments — notably Ministerial Regulation No. 36/2021 on Low Carbon Emission Vehicles and Permenperin No. 6/2022 — to mandate progressively higher TKDN levels. For EVs, the target rises stepwise to 80%, with implementation timelines anchored to 2026. As explained by Rachmad Basuki, Secretary General of the Association of Automotive and Motorcycle Component Industries (GIAMM), this threshold is designed to shift investment beyond mere assembly: “With 80% TKDN, domestic components will be absorbed — especially batteries,” he said in an interview on Sunday, 30 August 2026.
Under this framework, foreign automakers must increasingly source parts from Indonesian suppliers or face restrictions on incentives and market access. The policy echoes earlier success with the Low Cost Green Car (LCGC) program, where a mandatory 80% TKDN requirement — enforced at launch — catalyzed rapid growth in national component manufacturing capacity.
The Ministry of Industry reaffirmed its commitment to building production foundations rather than merely serving as an export market. Febri Hendri Antoni Arief, Spokesperson for the Ministry, stated: “We do not want our domestic market to be used only as a sales destination without building production bases here — so that economic value addition remains in Indonesia.” This stance underpins all current industrial facilitation efforts, including those targeting internal combustion engine (ICE), hybrid, and battery-electric vehicle (BEV) technologies.
BYD Engagement Underway; VinFast Cooperation Expected
BYD is scheduled to officially inaugurate its Indonesian manufacturing facility in Subang Smartpolitan Industrial Park, Kabupaten Subang, West Java, on Thursday, 3 September 2026, with President Prabowo Subianto invited to attend. Government-facilitated business matching has already enabled domestic component suppliers to begin technical and commercial discussions with BYD, according to Rachmad Basuki.
In contrast, formal dialogue with VinFast — the Vietnamese automaker — has not yet commenced. However, Rachmad anticipates bilateral cooperation will follow as TKDN targets are implemented incrementally: “For VinFast, it hasn’t happened yet — although I am confident that, with the government’s phased TKDN targets, VinFast and local component industries will conduct B2B engagement.”
Three core EV components — batteries, electric motors, and power control units (PCUs) — remain in early-stage development domestically. While local firms already produce many general-purpose parts, these high-value, technologically intensive systems require scaled-up capacity and technology transfer — outcomes the government aims to accelerate through targeted incentives and regulatory enforcement.
Incentives Shift Toward Supply Chain Development
Saleh Husin, Deputy Chair of the Industrial Sector at the Indonesian Chamber of Commerce and Industry (Kadin), stressed that automotive incentives must pivot from consumer-facing sales support toward upstream supply chain strengthening. “Incentives going forward must focus on the supply chain — on component industries — so that the component industry grows organically and the automotive industry becomes more competitive,” he said.
Rachmad Basuki underscored the economic weight of components, noting that 70% of a vehicle’s value chain originates from parts and components. He called dedicated supply-chain incentives “very important” to help local firms meet rising demand from global EV producers. Saleh added that such policies would also create opportunities for micro, small, and medium enterprises (MSMEs) embedded in automotive supply tiers — provided regulations actively compel localization rather than merely encouraging it.
“That is what we must push — perhaps through regulatory policy — to compel them to produce and use domestic component industries, so we capture added value.” — Saleh Husin, Deputy Chair of the Industrial Sector, Kadin Indonesia
Source: kompas.id
Compiled from international media by the SCI.AI editorial team.
