President Jokowi Issues Instruction on Domestic Product Use Intensification for Gov’t Goods/Service Procurement

President Joko “Jokowi” Widodo has issued Instruction of President of the Republic of Indonesia Number 2 of 2022 on Acceleration of Domestic Product and Micro Enterprise, Small Enterprise, and Cooperative Product Use Intensification to Support Bangga Buatan Indonesia (Proud of Indonesian Products/BBI) National Movement for Government Goods/Service Procurement.

The Presidential Instruction signed by President Jokowi on March 30 is addressed to Ministers of the Indonesia Onward Cabinet, Cabinet Secretary, Presidential Chief of Staff (KSP), Heads of Non-Ministry Government Institutions (LPNK), Attorney General of the Republic of Indonesia, Commander of the Indonesian National Defense Forces (TNI), Chief of the Indonesian National Police (Kapolri), Heads of the Secretariat of State Institutions, Governors, and Regents/Mayors.

In order to accelerate use intensification of domestic, micro enterprise, small enterprise, and cooperative products to support the BBI National Movement for government goods/service procurement, the President instructed the aforementioned administration officials to:

1. Stipulate and/or revise policies and/or regulations to accelerate domestic product use intensification and empowerment of micro enterprises, small enterprises, and cooperatives.
2. Plan, allocate, and realize government goods/service procurement using domestic products in ministries/institutions and regional governments.
3. Plan, allocate, and realize at least 40 percent of the goods/service spending budget for micro enterprise, small enterprise, and cooperative products resulted from domestic production.
4. Support the achievement of the 2022 State Budget and Regional Budget spending target of at least Rp400 trillion for domestic products with micro enterprise, small enterprise, and cooperative products as the top priority.
5. Establish Domestic Product Use Intensification (P3DN) Team at ministries/institutions and regional governments.
6. Formulate a strategy roadmap to intensify the use of domestic, micro enterprise, small enterprise, and cooperative products, including a roadmap to increase the number of domestic products to one million products displayed on Electronic Catalog.
7. Deliver a program to reduce import to 5 percent by 2023 at the latest for ministries/institutions and regional governments that still spend for imported goods/services.
8. Use domestic products with Domestic Component Level (TKDN) of at least 25 percent if there are domestic products with a total TKDN and Company Benefit Weight values of minimum 40 percent.
9. Boost display acceleration of domestic, micro enterprise, small enterprise, and cooperative products on Sectoral Catalog/Local Catalog.
10. Announce all government spending for goods/service procurement on the Public Procurement Plan Information System (SiRUP) of the National Public Procurement Agency (LKPP) and fill e-Contract on Electronic Procurement System (SPSE).
11. State the requirement to use domestic products and products of micro enterprises, small enterprises, and cooperatives/small and medium industries (SMI)/artisans on all cooperation contracts.
12. Remove requirements that hinder the use of domestic products and products of micro enterprises, small enterprises, and cooperatives in government goods/service procurement.
13. Change manual procurement process into electronic procurement process by 2023 at the latest.
14. Collaborate with ministries/institutions and regional governments to empower micro enterprises, small enterprises, and cooperatives by making their products a part of the global supply chain industry.
15. Provide price preferences in government goods/service procurement to purchase domestic products with TKDN value of at least 25 percent in accordance with laws and regulations.
16. Integrate data and information on domestic products and products of micro enterprises, small enterprises, and cooperatives through One Data Indonesia (SDI) implementation to support data-based policies in government goods/service procurement in accordance with the framework of Electronic-Based Government System (SPBE).

In addition, the President has also given a special instruction to several parties. Coordinating Minister for Maritime Affairs and Investment and Coordinating Minister for Economic Affairs are instructed to coordinate the improvement of laws and regulations as well as ecosystem in their respective sectors to accelerate use intensification of domestic, micro enterprise, small enterprise, and cooperative products to support BBI national movement for government goods/service procurement.

Furthermore, Minister of Home Affairs is instructed to renew policies to accelerate use intensification of domestic, micro enterprise, small enterprise, and cooperative products to support BBI national movement for goods/service procurement in regional governments. One of the measures is to urge Governors and Regents/Mayors to give regional tax incentives and regional retributions for micro enterprises, small enterprises, and cooperatives.

Moreover, Minister of Finance is instructed to give incentives to regional governments that have fulfilled the obligation to use domestic products and products of micro enterprises, small enterprises, and cooperatives for government goods/service procurement, which has been proved by authorized institutions and other considerations in giving the incentive. The Minister of Finance is also instructed to give tax incentives to boost spending on domestic products and products of micro enterprises, small enterprises, and cooperatives in accordance with laws and regulations in taxation.

Meanwhile, Minister of Education, Culture, Research, and Technology is instructed to enhance domestic product development carried out by education units, especially by vocational high schools, to create micro enterprise, small enterprise, and cooperative products, and to improve domestic product development carried out by higher education institutions to create import substitute products.

Minister of Health, on the other hand, is instructed to simplify requirements and speed up the process to issue business license for domestic, micro enterprise, small enterprise, and cooperative products; to accelerate display of domestic products on health sector catalog (pharmaceutical supplies and medical devices); and to renew policies to accelerate domestic pharmaceutical supply and medical device use intensification.

Minister of Industry is also instructed to multiply, accelerate, and provide TKDN certification incentives for domestic products required for government goods/service procurement, as well as to accelerate the display of TKDN-certified domestic products on Electronic Catalog. In addition, Minister of Industry is instructed to identify domestic products and domestic industry readiness, and to carry out periodical business matching event for domestic producers and product users to fulfill the needs for government goods/service procurement, and to take follow-up actions.

Minister of the National Development Planning (PPN)/Head of the National Development Planning Agency (Bappenas) is instructed to develop analysis instrument or modeling based on big data and artificial intelligence (AI) to support planning that is focused on the development of domestic industry, micro enterprise, small enterprise, and cooperative sector, and to coordinate as well as to facilitate government goods/service procurement to become the pilot project of SDI.

Minister of State Apparatus Empowerment and Bureaucratic Reform is instructed to coordinate the implementation of nationally integrated SPBE to boost the use of domestic products and/or micro enterprise, small enterprise, and cooperative products in government spending on goods/services.

The President also gave instructions to Minister of State-Owned Enterprises to order SOEs to formulate a roadmap of domestic product and/or micro enterprise, small enterprise, and cooperative product use; to obligate SOEs to allocate corporate social responsibility (CSR) for capacity improvement of micro enterprises, small enterprises, and cooperatives in accordance with laws and regulations; to prepare SOEs as producers of imported goods/service substitute; and to coordinate with the Financial Services Authority (OJK) to support financing of business actors as business capital to produce domestic product demands of ministries/institutions and regional governments.

Furthermore, Minister of Cooperatives and Small and Medium Enterprises (SMEs) is instructed to develop domestic micro enterprises, small enterprises, and cooperatives, whose production capacity is not enough and/or whose products are unavailable to fulfill the needs for domestic products; to promote and carry out periodical business matching events for micro enterprises, small enterprises, and cooperatives as suppliers and ministries/institutions and regional governments as buyers for government spending on domestic products, as well as to follow up the implementation of business matching; and to develop and manage catalogs of micro enterprises, small enterprises, and cooperatives that can be used for electronic transaction.

Moreover, Minister of Investment/Head of the Investment Coordinating Board (BKPM) is instructed to boost investment in Indonesia in products with high import values in government spending; to provide incentives for investors for domestic product development and recommendations on high-technology domestic product development based on innovation and research, especially for industries with low domestic product availability; and to accelerate the development of the Online Single Submission (OSS) System that can classify business actors and be integrated with SPSE.

Minister of Communications and Informatics is also instructed to strengthen telecommunication infrastructure so that all systems related to the acceleration of domestic, micro enterprise, small enterprise, and cooperative product use intensification to support the BBI national movement for government goods/service procurement can be accessed by ministries/institutions and regional governments.

Meanwhile, Minister of Tourism and Creative Economy/Head of the Tourism and Creative Economy Agency is ordered to develop a creative economy ecosystem to support innovations of creative products that can be used to fulfill domestic product demands for government spending.

The President also instructed Head of the LKPP to:

1. increase the number of products to one million on Electronic Catalog, especially domestic products;
2. provide data and information access related to SiRUP, e-Tendering, e-Purchasing, non-e-Tendering, non-e-Purchasing, and e-Contract to be extracted earlier as early warning system/monitoring mechanism;
3. improve laws and regulations and government goods/service procurement system to accelerate use intensification of domestic products and products of micro enterprises, small enterprises, and cooperatives to support the BBI national movement for government goods/service procurement;
4. multiply domestic, micro enterprise, small enterprise, and cooperative products on National Electronic Catalog and Online Shop Catalog;
5. accelerate the establishment of Sectoral Catalog and Local Catalog in more than 400 ministries/institutions and regional governments;
6. provide ‘Domestic Product’ input menu on e-Contract to identify the value of domestic products in government spending; and
7. provide database access to related ministries/institutions and regional governments that need to carry out monitoring and evaluation, demand analysis, financial analysis, economic analysis, examination, and audit.

On the other hand, Head of Statistics Indonesia (BPS) is instructed to manage the big data on government goods/service procurement to boost the use of domestic products and/or micro enterprise, small enterprise, and cooperative products.

Meanwhile, Head of the National Research and Innovation Agency (BRIN) is instructed to enhance results of research on domestic product development to create import substitute products.

Head of the Finance and Development Supervisory Agency (BPKP) is also instructed to monitor the Acceleration of Domestic Product Use Intensification Program and spending on domestic products, including micro enterprise, small enterprise, and cooperative products, in ministries/institutions and regional governments, and to coordinate Government Internal Supervisory Apparatus (APIP) of ministries/institutions and regional governments to assist monitoring in their respective institutions.

The President also instructed Governors, Regents, and Mayors to provide additional registration service for business actors as government goods/service provider (SPSE and SiKAP) at regional public service malls, including consulting service for registration as merchants on Trade Organizers through Electronic System (PPMSE); to support display acceleration of domestic products and/or micro enterprise, small enterprise, and cooperative products on Local or Online Shop Catalog; and to order regional apparatus organization (OPD) to buy domestic products through Local or Online Shop Catalog.

“Funding for the acceleration of domestic product and micro enterprise, small enterprise, and cooperative product use intensification to support Bangga Buatan Indonesia National Movement for government goods/service procurement is imposed on the State Budget, Regional Budgets, and/or other legal and non-binding sources in accordance with laws and regulations,” the final part of Presidential Instruction Number 2 of 2022 reads. (UN) (DH/MUR)