Procurement Professional is the official publication of CIPS Australasia

Indonesian groups say new rule on local procurement tough to enact

30 Aug 2010

Source: The Jakarta Post

Several Indonesian business associations stated they are worried about a newly signed presidential regulation on the procurement of domestic goods by state-owned institutions.  The new regulation requires domestic products procured by these institutions to have a minimum of 40 percent of local content while also demanding preferential treatment is given to bidders selling or using locally-made content.

The associations agreed they were wary of the government’s methodology for calculating a product’s local content and demanded that businesses have a voice in creating new government procurement procedures. Indonesian Chamber of Commerce and Industry medicine and health equipment chief Budi Prasetio said it would be hard for the pharmaceutical industry to calculate the level of local components in medicines because most of its raw materials were imported.

The regulation, which was signed by the President on Aug. 6, was intended to force state institutions to buy more domestic products during their procurements.

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