Government Procurement Policy for Domestic Product Empowerment
Published:
2026-09-14Abstract
The government's procurement policy of goods/services has the strategic potential to empower domestic products through large state expenditure allocations. This study aims to analyze the implementation of these policies, measure the effectiveness of price preferences, and identify the main obstacles faced by local providers. The research method uses a qualitative approach with a case study type, involving in-depth interviews with 25 local goods/service providers, observation of 40 tender packages in five local governments, and analysis of secondary data from the LKPP e-Catalog for the January-December 2024 period. The results of the study show three main findings. First, the level of use of domestic products increased but was dominated by products with a Domestic Component Level (TKDN) of 25-40% (62% availability, 48% orders), while TKDN products >60% only controlled 12% of availability and 17% of orders. Second, the price preference policy effectively increased the victory of local TKDN products ≥40% to 61.2%, but the average price difference was still 9.5% higher than imported products, indicating dependence on protection. Third, the main obstacles to local providers include difficulties in TKDN certification (88%), technical specifications leading to imported products (76%), and slow payments (72%). This study concludes that government procurement policies for domestic product empowerment have shown progress but still face structural challenges. It is necessary to simplify certification, strengthen supervision of tender specifications, guarantee payment discipline, and long-term local industry capacity building programs so that these policies really have an impact on national economic independence.
Keywords:
Government Procurement Domestic Products TKDN Price Preferences, Local Industry EmpowermentReferences
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