Government Requires Local Content of 4G Devices to Reach 40% in 2017

The three ministries agreed to tighten regulations on mobile devices (smartphones and tablets) that support 4G/LTE in Indonesia. As stated by the Minister of Communication and Information Rudiantara, 4G/LTE devices must already have 40% local content as of January 1, 2017. If this is less than that, the device in question is prohibited from being sold in Indonesia.

The Ministry of Communication and Informatics, the Ministry of Trade, and the Ministry of Industry are said to have agreed to encourage the domestic telecommunications industry with this new regulation. So far, the prevailing rule is that local content reaches 30%, but it is not strictly enforced. Under these conditions, devices that are 100% manufactured and imported from China, from various brands, can no longer be freely sold in Indonesia.

As quoted from Coverage 6, Rudiantara said, "In the future, all 4G smartphones and tablets must meet the local content requirement of 40%. Right now it's still free, if this rule has been implemented we will be strict if it doesn't meet the requirements, it can't be sold in Indonesia."

Regulations like this do provide opportunities for local smartphone and tablet manufacturers to become champions of their own country, but of course without sacrificing quality. A clear example is the success of Lenovo and Xiaomi in China because their products have competitive quality at a more affordable price.

Another segment that has also benefited from this regulation is independent design house, like TSM Technologies (TSM), which helps design 4G/LTE devices for vendors. TSM has partnered with Qualcomm as a manufacturing partner chipset and Sat Nusapersada as a mobile phone manufacturer partner with a factory in Batam. TSM has also prepared an investment of IDR 20 billion for the development and training of human resources.

"This rule will take effect from January 1, 2017, all 4G devices that do not meet the local content requirement of 40%, we are prohibited from selling in Indonesia," he said.