In January 2014, the government of Indonesia announced a change in the access to public tenders.



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Inception date: 13 Jan 2014 | Removal date: open ended

Public procurement access

On 13 January 2014, the Indonesian Ministry of Industry issued regulation 02/M-IND/PER/1/2014 restricting public procurement and thereby replaced regulation 15/M-IND/PER/2/2011.
According to the new law, the procurement of public goods and services is categorized depending on the Domestic Component Level (TKDN) and the Company Utilization Point Rating (BMP), which is based on investments of the suppliers in Indonesia. The points for investments include such aspects as supporting micro & small enterprises, application of work, health & environmental safety standards or the possession of a management quality certificate (art. 1(8) of 02/M-IND/PER/1/2014).
Article 6 of the regulation stipulates that the scores from the TKDN and BMP create three categories of goods:

  • obligatory goods with a cumulative score of over 40% including at least over 25%of TKDN
  • maximised goods with a cumulative score of over 40% including at least over 15% of TKDN
  • empowered goods must have a TKDN-score of at least 10%.

For government procurement, obligatory goods must be prioritized if available. Similarly, maximised goods are preferred over empowered goods (art. 7). For this process, the goods in the three categories must be offered separately, where applicable.
Furthermore, a similar ranking is given for suppliers: domestic service suppliers need to be prioritized, as given by art. 10. In order to be considered as a domestic service supplier, the majority of shares have to belong to an Indonesian citizen and two thirds of the board members have to be locals. If no domestic service suppliers are participating in the procurement, national service suppliers (with at least 10% of shares belonging to Indonesians) will be taken into consideration. Only once these are unavailable as well, will foreign service suppliers be allowed in the procurement process as well (art. 16(1)).
Other regulations were introduced concerning consortiums as they must be led by a domestic service supplier for onshore construction. In the case of offshore constructions the workers have to fulfilled only to 30% by a domestic supplier. This minimum increases to 50%, when the consortiums includes national or foreign service suppliers.
Also, price preferences are issued for bidders with more than 25% of TKDN or striving to achieve at least 30%. The price preferences can be up to 15% for the procurement of goods and maximally 7.5% for services.
The provisions came into force on the day of issuance.