Indonesia’s Automotive Industry Highlights Business Barriers from Licensing to SME Financing Access

JAKARTA, KOMPAS.com - Indonesia's automotive industry players have highlighted several challenges in developing the national industry, ranging from licensing issues to financing access for small and medium enterprises (SMEs).

These concerns were raised during a business meeting between the government, national automotive industry stakeholders, and Japanese partners involving the Coordinating Ministry for Economic Affairs in Nagoya, Japan, on Saturday (19/9/2026).

Besides licensing and financing problems, business actors also discussed the issue of Domestic Component Level (TKDN) certification, especially during the transition period to electric vehicles.

The meeting was attended by Economic Coordinating Ministry Secretary General Susiwijono Moegiarso, Deputy for Trade and Digital Economy Coordination Ali Murtopo Simbolon, and leaders from PT Toyota Motor Manufacturing Indonesia (TMMIN), Denso Indonesia, Aisin Indonesia, and Advics Indonesia.

Susiwijono stated that input from business actors is a crucial part of the government's efforts to strengthen the competitiveness of the national automotive industry.

"The government welcomes all these inputs and reiterates its commitment to continuously refine policies through concrete steps, including addressing ongoing investment barriers," he said in a written statement on Sunday (20/9/2026).

He explained that industry competitiveness is built from a combination of technological mastery, strengthening human resources, and a robust supply chain ecosystem.

This foundation supports Indonesia's efforts to bolster its manufacturing and automotive industries.

Alongside national industry development efforts, Susiwijono said the government is expanding market access through international trade agreements.

Indonesia has currently signed 25 international trade agreements, in the form of free trade agreements (FTAs) and comprehensive economic partnership agreements (CEPAs).

One key focus is the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA). Ratification of this agreement is scheduled to begin in November 2026, targeting implementation in January 2027.

The government hopes that expanded market access will support Indonesia's position within the global automotive industry value chain.

Currently, Indonesia is regarded as a production base for exports to over 100 destination countries.

This move is part of the government's broader strategy to maintain growth momentum amid an improving global economic outlook for 2027, projected to range between 3.2-3.3 percent.

"Domestically, the government continues to strengthen the economic foundation, which is still dominated by consumption and investment sectors. Various social assistance programs, subsidies, and fiscal incentives are being implemented to maintain purchasing power and strengthen demand," he said.

Besides expanding markets and strengthening the economy, the government is also pushing for the development of new technologies increasingly linked to the automotive industry, including artificial intelligence (AI) and semiconductors.

Indonesia has established cooperation with ARM, joined WAICO as a member, and is currently exploring and communicating with PAX Silica.

Strengthening the semiconductor sector is considered relevant to the automotive industry as vehicles increasingly depend on semiconductor components and intelligent technologies.