Recently, Indonesia's legal regulations particularly in relation to the local content requirement (Tingkat Komponen Dalam Negeri - TKDN) on electricity infrastructure development have showcased a significant change. This change was initiated by Government of Indonesia (GOI) to provide stable investment climate in Indonesia. It is important to note that there are several key GOI authorities involved in this particular sector including the Ministry of Energy and Mineral Resources (MEMR), the Ministry of Industry (MOI), and the Coordinating Ministry for Maritime and Investment Affairs (Marves).

As initial matter, the purpose of the local content requirement is to promote the development of goods and services in Indonesia. The first regulation concerning local content requirement for goods and services in the electricity infrastructure development was issued more than decades ago by the issuance of MOI Regulation No. 54/M-IND/PER/3/2012 (MOI 54/2012) which govern the minimum threshold for goods and services in the electricity infrastructure development sector. However, there are two significant challenges regarding the issuance of MOI 54/2012. First, it seems the minimum threshold for the local content requirement set in Chapter II MOI 54/2012 was relatively high to achieve for government institutions and business entities. Second, there is also a rapid development in renewable energy projects across Indonesia which further escalate the need for change regarding the local content requirement in the electricity infrastructure development to accommodate these challenges.

In view of the above, the MEMR issued Regulation No. 11 of 2024 on the Use of Domestic Products for the Development of Electricity Infrastructure (MEMR 11/2024) to provide more clarity and certainty in the electricity infrastructure development sector. In addition to this regulation, MEMR also issued a Decree No.191.K/EK.01/MEM.E/2024 on the Minimum Domestic Component Threshold for Combined Goods and Services in the Scope of Electricity Infrastructure Development Project (MEMR Decree 191/2024) which provide detailed information regarding the local content thresholds for each type of electricity infrastructure. Those two legal frameworks are expected to bring a stable investment and provide a security to the investors in Indonesia. 

For more information of our overview on this new regulation, please access here.