DOMESTIC COMPONENT LEVEL (TKDN) & RELATED REGULATIONS

What Is TKDN?

Domestic Component Level (TKDN) refers to the percentage of domestic content contained in goods, services, or a combination of goods and services, calculated in accordance with the applicable laws and regulations.

The TKDN policy is aimed at increasing the use of domestic products, strengthening the competitiveness of national industries, and promoting greater value added and industrial self-reliance.

Main TKDN Regulations

  • Law No. 3 of 2014 on Industry serves as one of the main legal foundations for the implementation of the TKDN policy in Indonesia.
  • Government Regulation No. 29 of 2018 on Industrial Empowerment provides further provisions concerning the calculation and verification of TKDN values and the Company Benefit Weight (Bobot Manfaat Perusahaan/BMP).
  • Minister of Industry Regulation No. 35 of 2025 on Provisions and Procedures for the Certification of Domestic Component Level and Company Benefit Weight (BMP) is the primary reference for the TKDN certification process currently in force.
  • Minister of Industry Regulation No. 35 of 2025 was issued on 11 September 2025 and came into effect on 11 December 2025. This regulation revoked several previous provisions, including Minister of Industry Regulation No. 16/M-IND/PER/2/2011 on Provisions and Procedures for the Calculation of Domestic Component Level (TKDN).
  • Regulation of the Director General of Chemical, Pharmaceutical and Textile Industries No. 8 of 2026 constitutes an amendment to Director General Regulation No. 3 of 2025 concerning the Details of Main Components of Goods in the Chemical, Pharmaceutical and Textile Industry Sector for the Calculation of TKDN.
  • Regulation of the Director General of Chemical, Pharmaceutical and Textile Industries No. 13 of 2026 constitutes the second amendment to Director General Regulation No. 3 of 2025 concerning the Details of Main Components of Goods in the Chemical, Pharmaceutical and Textile Industry Sector for the Calculation of TKDN. This regulation was issued on 30 July 2026 and represents the latest update relevant to the chemical, pharmaceutical and textile industries, including the paint industry.

Policy Update under Minister of Industry Regulation No. 35 of 2025

Minister of Industry Regulation No. 35 of 2025 introduces changes to the calculation and certification process for TKDN. The regulation covers the calculation of TKDN for goods, industrial services, and combinations of goods and services, including the verification process and issuance of TKDN certificates.

For goods, TKDN is calculated using three production factors:

  • Direct materials: 75%
  • Direct labor: 10%
  • Factory overhead: 15%

Calculation of Main Components

One of the important changes is the use of the main component concept in calculating the direct material factor. The TKDN value of main components is calculated based on their certification status and country of origin.

Main components that have a TKDN Certificate are assessed using a tiered system based on their respective TKDN values. Meanwhile, main components that do not yet have a TKDN Certificate may receive a certain value depending on whether the component is manufactured domestically and whether its raw materials originate from within Indonesia.

How Are Imported Raw Materials Treated?

The use of imported raw materials does not automatically prevent a product from being assessed for TKDN. However, the contribution of such components to the calculation must follow the applicable provisions concerning the origin of goods and the status of the main components.

Minister of Industry Regulation No. 35 of 2025 also provides a more structured framework for assessing domestic supply chains, including components manufactured in Indonesia. Therefore, manufacturers should properly document the origin of materials, suppliers, and components used in the production process.

Packaging and TKDN Marking

Minister of Industry Regulation No. 35 of 2025 distinguishes between packaging as part of a product and the TKDN Mark.

Under the regulation, the TKDN Mark may be displayed on the packaging or product label of goods that have obtained a TKDN Certificate. The use of the TKDN Mark is optional for business actors.

Latest Update for the Paint Industry: Director General Regulation No. 13 of 2026

Following the implementation of Minister of Industry Regulation No. 35 of 2025, the Ministry of Industry updated the details of main components for the chemical, pharmaceutical and textile industry sectors through Regulation of the Director General of Chemical, Pharmaceutical and Textile Industries No. 13 of 2026.

Director General Regulation No. 13 of 2026 constitutes the second amendment to Director General Regulation No. 3 of 2025. The regulation was issued on 30 July 2026 and came into effect on the date of issuance.

Main Components of Paint Products

In the latest annex, industrial paint products are grouped into three main categories:

  • Water-Based Paint
  • Solvent-Based Paint
  • Powder Paint

The main components listed are as follows:

1. Water-Based Paint

  • Resin
  • Pigments
  • Solvent
  • Filler
  • Additives
  • Primary Packaging

2. Solvent-Based Paint

  • Resin
  • Pigments
  • Organic Solvent
  • Filler
  • Additives
  • Primary Packaging

3. Powder Paint

  • Resin
  • Pigments
  • Filler
  • Additives
  • Primary Packaging

What Should Paint Manufacturers Do?

  1. Check the product classification
    Ensure that the product falls under the appropriate category of Water-Based Paint, Solvent-Based Paint, or Powder Paint based on its characteristics and classification.
  2. Map the main components
    Match the resin, pigments, solvents, fillers, additives, and primary packaging used in production with the main component details specified in the annex to Director General Regulation No. 13 of 2026.
  3. Verify the origin of raw materials
    Ensure that the country of origin of materials and the domestic production status of components can be supported by adequate documentation.
  4. Organize supplier documentation
    Maintain purchase documents, material specifications, supplier information, and other supporting documents so that the supply chain can be properly traced during the verification process.
  5. Ensure KBLI compliance
    Check that the KBLI (Indonesian Standard Industrial Classification) stated in the business license and application documents is consistent with the product classification being submitted.

Conclusion

Minister of Industry Regulation No. 35 of 2025 is the primary reference for TKDN certification procedures and has been in effect since 11 December 2025. The regulation establishes a clearer calculation structure for goods by using direct materials, direct labor, and factory overhead as the main production factors in determining TKDN.

For the paint industry, the subsequent update through Director General Regulation No. 13 of 2026 is particularly important because it specifies the main components for Water-Based Paint, Solvent-Based Paint, and Powder Paint.

Paint manufacturers should therefore review and align their material mapping, component origin, KBLI classification, supplier documentation, and supporting records to ensure that the TKDN calculation and certification process comply with the latest applicable requirements.