Further Deregulation Focuses on Incentives Over Penalties

Deputy Chairperson of the National Economic Council (DEN), Mari Elka Pangestu, stated that the next phase of deregulation process is still being discussed by the Coordinating Ministry for Economic Affairs (Kemenko Perekonomian).

Mari explained that the first phase of deregulation only included limited relaxation of the Domestic Component Level (Tingkat Komponen Dalam Negeri – “TKDN”) requirements and several provisions in Regulation of the Minister of Trade on imports. Meanwhile, the second phase primarily involves Government Regulation No. 28 of 2025 (“PP 28/2025”) on the Organization of Risk-Based Business Licensing (Penyelenggaraan Perizinan Berusaha Berbasis Risiko – “PBBR”), which aims to simplify the licensing process.

“Yes, of course, the lead is still with the Coordinating Ministry for Economic Affairs,” Mari told Hukumonline.

Although the regulation has already been issued, Mari noted that there are still many rules that need to be finalized to ensure the policy can function effectively, particularly in improving the Online Single Submission (“OSS”) system to make it more efficient.

In the TKDN roadmap, Mari emphasized the importance of strengthening competitiveness across sectors. “The President’s directive highlights a shift in the TKDN policy from a penalty-based system to an incentive-based system,” she said. “This means that companies achieving a high level of local content will be granted various fiscal and non-fiscal incentives or facilities.”