Compliance Analysis of Indonesia’s Local Content Requirement Measures: International Trade and Investment Agreement Perspectives
Date:
28 March 2025Category:
Investment, TradeType:
Policy BriefsTags:
Trade, Investment, LCR measures, local content requirementsPrint Article:
With the global economic landscape shifting from a relatively liberal to a more protectionist stance, local content requirements (LCRs) become more prevalent as a tool in industrial policy. During the last decade, Indonesia has adopted more LCR measures to build up strategic domestic industries to promote domestic value added. However, Indonesia has also made commitments in international trade and investment treaties which may be breached by these measures. Considering the importance of foreign direct investment for the growth of domestic industries, Indonesia should (i) review its LCR measures, (ii) assess the capacity of existing domestic industries to supply raw materials if the measures remain in effect, and (iii) prioritise improving the business environment.
