TKDN Local Content Requirements for Medical Device Procurement in Indonesia

1. Key takeaways

TKDN (Tingkat Komponen Dalam Negeri, the local component ratio) is Indonesia’s local content indicator. It is certified by the Ministry of Industry (Kemenperin) and verified by government-designated independent verification agencies (LVI) such as Surveyor Indonesia and Sucofindo, with certificates valid for 2 years. Permenkes 5/2026 converted TKDN from an implicit preference into an explicit obligation, and for any manufacturer targeting public hospitals or government programmes the TKDN position is now a competitive variable of the same weight as price. The regulation also reshapes the incentive structure: local content is no longer merely rewarded but effectively required for full access to public procurement, and the economics of manufacturing and sourcing decisions in Indonesia should be evaluated against that reality from the outset rather than after the first failed tender.

• Article 41 of Permenkes 5/2026 requires government agencies and healthcare facilities to give priority to medical supplies with the highest TKDN values in procurement.
• Article 41 paragraph (3) allows products using domestic raw materials or components to be priced higher and still be given priority in government procurement.
• Article 42 extends this preference explicitly to e-Katalog / LKPP electronic procurement.
• Three practical estimate thresholds: TKDN of 25 percent alone qualifies a product for the corresponding e-Katalog category; TKDN plus BMP (corporate benefit value) above 40 percent brings absolute priority in government healthcare procurement; TKDN above 52 percent unlocks additional e-Katalog categories reserved for high local content products.
• As of April 2025, Kemenperin data show 2,505 valid device TKDN certificates with values ranging from 16.45 percent to 92.22 percent, and domestic devices reaching 48 percent of e-catalog transactions.

2. Legal basis

The procurement preference is codified in Permenkes No. 5/2026. Article 41 obliges government agencies and healthcare facilities to prioritise the medical supplies with the highest TKDN values; Article 41 paragraph (3) provides that products using domestic raw materials or components may be priced higher and still be selected preferentially in government procurement; and Article 42 extends the preference to e-Katalog / LKPP electronic procurement. Article 18 of the same regulation formally recognises contract manufacturing (maklon), which is one of the practical routes to raising TKDN. Certification runs through Kemenperin with verification by designated LVI agencies such as Surveyor Indonesia and Sucofindo, and certificates are valid for 2 years. The 25, 40 and 52 percent thresholds cited here are practical estimates drawn from industry interpretation and are subject to the current rules of Kemenperin and LKPP, pending verification.

3. Expert insights

Can a product with 0 percent TKDN still be sold? Yes, but with limited competitiveness. Where the product is an innovative product with no equivalent available in Indonesia, 0 percent TKDN is acceptable, and remote regions such as Papua allow lower local content thresholds. Industry observation adds a caveat: hospitals in those regions are often more worried about government audits, and some buyers simply avoid products below 40 percent in order to sidestep audit risk. The commercial lesson is that a low TKDN position may be formally permissible while remaining practically unsellable in the public channel. Sales teams should therefore distinguish clearly between what the rule allows and what procurement officers will actually select, because the latter, not the former, determines whether orders materialise.

The industry data show that the 40 percent threshold is not symbolic but real, achievable and already achieved at scale. With 2,505 valid certificates as of April 2025 spanning hospital beds, injection devices, blood pressure monitors, electronic medical equipment and ventilators, and TKDN values from 16.45 percent to 92.22 percent, the domestic share of e-catalog transactions has already reached 48 percent. Foreign manufacturers competing for public tenders are therefore not racing against an abstract rule but against a large cohort of locally certified products that enjoy statutory priority. The practical implication is that TKDN should be built into the market entry plan at the same stage as registration, since the certification cycle runs on a 2-year validity and the verification work by the LVI agencies needs to be scheduled, not improvised alongside a tender deadline.

4. Practical recommendations

• If your target customers are public hospitals or government programmes, plan TKDN as a competitive variable equal in weight to price, not as a compliance afterthought.
• Evaluate the practical routes to local content early: local assembly, contract manufacturing (maklon, formally recognised under Permenkes 5/2026 Article 18), or cooperation with local manufacturers.
• Do not wait until a bid is lost before considering localisation; the certification and verification process takes time within the 2-year certificate cycle.
• Verify TKDN claims of any local partner through the LVI certificate rather than accepting self-declared values, checking both the certificate validity and the certified value itself.
• Track the thresholds against the current Kemenperin and LKPP rules, since the 25, 40 and 52 percent figures cited are practical estimates pending verification.
• Where the portfolio includes genuinely innovative products with no Indonesian equivalent, document that position explicitly, since it is the recognised basis on which a 0 percent TKDN product remains acceptable.
• Combine TKDN planning with pricing strategy: Article 41 paragraph (3) permits a higher price for domestic-content products while preserving procurement priority.
• Where a partner or supplier contributes local components, track the composition of the TKDN value continuously, since changes in sourcing during the 2-year certificate validity can move the certified value.

5. Verification checklist

• □ Confirm Permenkes No. 5/2026 Article 41, Article 41 paragraph (3), Article 42 (TKDN procurement preference) and Article 18 (contract manufacturing).
• □ Confirm the Kemenperin TKDN certification process and LVI verification mechanism, including Surveyor Indonesia and Sucofindo, with 2-year certificate validity.
• □ Confirm the Kemenperin public data for April 2025: 2,505 certificates, TKDN values 16.45 percent to 92.22 percent, and 48 percent domestic share of e-catalog transactions.
• □ Note that the 40, 25 and 52 percent thresholds are practical estimates from industry interpretation, pending verification against current Kemenperin and LKPP rules.

How GRZAN can help. GRZAN provides medical device and IVD registration, quality system, authorised representative and local testing support across Southeast Asia, including Indonesia. Our team prepares dossiers to ASEAN CSDT structure, manages AKL/AKL-I submissions with Kemenkes, and supports post-market vigilance obligations. Business enquiries: info@grzanglobal.com