Compliance Analysis of Indonesia’s Local Content Requirement Measures: International Trade and Investment Agreement Perspectives
Indonesia is increasingly utilizing local content requirements (LCRs) across key sectors to support domestic industries and value addition, but these measures may breach its international trade and investment obligations under WTO and bilateral agreements.
While LCRs aim to reduce dependency on imports and encourage local industry growth, they could expose Indonesia to legal challenges and dissuade foreign investors. To strike a balance, Indonesia is advised to review its LCR policies, assess domestic capacity to supply required inputs, and improve its overall business environment to attract investment and ensure long-term industrial competitiveness.