The Difference Between TKDN and "Local Content" in General

In practice, the term "TKDN" is often used interchangeably with the general term "local content." While related, these two terms are not entirely identical, and this confusion can affect how a company prepares its documents and procurement strategy.

What Is TKDN

TKDN (Local Content Level) is the achieved value of domestic content in a good, service, or combination of both, calculated and verified through an official method, then expressed as a certificate with a specific percentage value. The TKDN certificate is issued through a formal mechanism and serves as a reference in government and state-owned enterprise (BUMN) procurement.

What "Local Content" Means in General

The term local content is often used loosely to describe how much a product uses domestic raw materials, labor, or production processes — without referring to an officially verified figure. Such claims may appear in a company's marketing materials, but are not automatically equivalent to a certified TKDN value.

Why This Distinction Matters

• For government or BUMN tender purposes, what is recognized is the certified TKDN value, not an unverified local content claim.
• Companies relying solely on internal estimates without official certification risk failing to meet administrative requirements during procurement.
• The TKDN calculation method follows official provisions that differ from how a company typically calculates its local component share internally.

When a Company Needs an Official TKDN Certificate

If your company plans to participate in government goods/services procurement, a BUMN project, or a project that explicitly requires a preference for domestic products, an official TKDN certificate is the document that needs to be prepared — not merely an internal local content estimate.

Summary

TKDN is the formal, verified form of the local content concept. Understanding this distinction helps procurement and legal teams avoid misunderstandings when preparing documents for tenders or procurement that require a TKDN value.