REPUBLIKA.CO.ID, BANDUNG - The terms on the necessity of local content could possibly encourage changes in the investment pre-conditions, the advisor of the Indonesian Ministry of Industry Ferry Yahya stated on Tuesday.

"It is not impossible that the Regulation Law No. 3/2013 on industry, especially with regard to the local content, may encourage redefining the investment terms," Yahya remarked.

The encouragement to use local components in the industry today continues as the quality has to meet the needs of the industry. Referring to investment, Yahya highlighted the necessity to have certain local components for the establishment of a new industry, so that it could extend the chain value of the local economy.

"Industries that use high local content are currently given incentives by the government, and it might later become a requisite," Yahya affirmed.

Yahya stated that there was a constant need to increase the use of local products in government procurement of goods and services. The industry is encouraged to track the use of local products and domestic components in its production.

According to Law No. 3/2014, chapter 85, the need to increase the use of domestic products means that the law will eventually be translated into a government regulation. The new regulation then will act as a reference for government procurement of goods and services. According to the Presidential Decree No. 54/2010 or Presidential Decree No. 70/2012 on the regulation of government procurement of goods and services, the siding for local products is already underway.

"When a product having more than 40 percent local content is to be auctioned then a participant who brings any imported product will directly fail the auction," Yahya added.

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