The formulation for calculating TKDN is as follows:
%TKDN for Goods = ((Production Cost - Foreign Component Cost) / Production Cost) * 100%

For example, for a car with domestic component costs of IDR 100 million and foreign component costs of IDR 50 million, the TKDN calculation is:
TKDN = ((100 - 50) / 100) * 100% = 50%

Another example, a CNC machine with domestic component costs of IDR 200 million and foreign component costs of IDR 100 million, has a TKDN calculation as follows:
TKDN = ((200 - 100) / 200) * 100% = 50%

The Indonesian government has also set target TKDN values for several industrial sectors, such as the pharmaceutical industry, which is targeted to reach 50% by 2024, the electronics industry 70% by 2025, and the automotive industry 80% by 2030. The hope of this policy is for domestic products to continue to develop in terms of quality and for the public to prefer local products over imported products. In the highly competitive era of globalization, TKDN is the key to sustainable economic growth and competitiveness of the domestic industry.

With the support of the public and improvement in the quality of local products, the TKDN policy is expected to drive the development of the national industry and reduce dependence on imported products, which in turn will strengthen Indonesia's economy.

 

Source: kumparan.com