New Procurement Rules Strengthen E-Purchasing and Domestic Product (TKDN) Priorities
Indonesia has introduced an updated framework for government procurement through the issuance of Regulation of the National Public Procurement Agency (Lembaga Kebijakan Pengadaan Barang/Jasa Pemerintah “LKPP”) No. 3 of 2026 on Guidelines for the Preparation and Implementation of Government Procurement of Goods/Services through Providers (“LKPP Regulation 3/2026”).
Effective from 22 September 2026, LKPP Regulation 3/2026 replaces the previous procurement guidelines under LKPP Regulation No. 12 of 2021, as amended by LKPP Regulation No. 4 of 2024. The new framework aligns procurement procedures with Presidential Regulation No. 16 of 2018 on Government Procurement of Goods/Services, as most recently amended by Presidential Regulation No. 46 of 2025.
For businesses supplying goods, services, consultancy services, or construction works to government institutions, the changes are particularly relevant as they strengthen the role of electronic procurement, provider performance, and domestic-product preference (TKDN) in determining access to government procurement opportunities.
Mandatory E-Purchasing for Catalogue-Listed Products
LKPP Regulation 3/2026 maintains five principal methods for procurement through providers: e-purchasing, direct procurement, direct appointment, quick tender, and tender/selection.
One of the most significant changes concerns the use of e-purchasing. Goods, other services, and non-construction consultancy services that are already listed in the electronic catalogue must generally be procured through e-purchasing.
Exceptions are available in specified circumstances, including where the products or services available in the catalogue cannot satisfy the required volume, technical specifications, timing, location and/or services. The assessment of whether such an exception applies is made by the relevant Commitment-Making Official (Pejabat Pembuat Komitmen “PPK”).
Accordingly, suppliers participating in government procurement should increasingly consider electronic-catalogue participation as an important element of their government-market strategy.
Wider Availability of Repeat Orders
The new regulation also expands the scope for repeat orders.
Previously, repeat orders were limited to construction and non-construction consultancy services. Under LKPP Regulation 3/2026, they may also be used for goods, other services, and construction works, provided that the initial work was awarded through a tender or selection process.
A repeat order may be awarded up to two times within three years following the final handover of the initial work. The provider must have at least a “good” overall performance rating and a “very good” rating for the initial work. In addition, the HPS for the repeat-order package must not exceed the final contract value of the initial work.
This creates a stronger commercial link between a provider’s performance on an existing government contract and its ability to secure subsequent procurement opportunities.
Higher Threshold for Direct Procurement of Construction Works
LKPP Regulation 3/2026 increases the threshold for direct procurement of construction works. Construction works with an HPS of up to IDR 400 million may now be conducted through direct procurement, compared with the previous threshold of IDR 200 million. The change potentially provides a more streamlined procurement route for smaller-scale government construction projects.
Electronic Procurement: Transactional and Recording Features
Government procurement through providers must now be conducted through the electronic procurement system and its supporting systems using either a transactional feature or a recording feature.
The transactional feature is required for, among others, direct procurement of goods, construction works and other services above IDR 50 million; direct procurement of consultancy services; direct appointments; quick tenders; tenders/selections; and limited tenders for accelerated development in Papua.
The recording feature may generally be used for direct procurement of goods, construction works and other services of up to IDR 50 million. In certain circumstances, it may also be used above this threshold for individual providers of other services supporting public-service operations, subject to the required assessment and prior review by the government internal supervisory apparatus.
Stronger Priority for Domestic Products and TKDN
A particularly important development for manufacturers and suppliers is the restructuring of the Domestic Component Level (Tingkat Komponen Dalam Negeri “TKDN”) requirements.
LKPP Regulation 3/2026 establishes a tiered priority mechanism under which procurement must prioritize categories of domestic products before moving to lower-TKDN products and, ultimately, imported products. Each subsequent category may generally be considered only where products within the preceding category are unavailable or insufficient in volume.
The priority framework places qualifying domestic products at the forefront of procurement decisions, including domestic products with a TKDN of at least 25%, before domestic products with a TKDN below 25% and imported products are considered.
This represents a stronger policy direction toward the utilization of Indonesian products in government procurement and may materially affect suppliers whose products rely heavily on imported components or whose TKDN certification has not yet been obtained or updated.
What This Means for Businesses
For businesses supplying the Indonesian Government, LKPP Regulation 3/2026 makes procurement readiness increasingly dependent not only on price and technical capability, but also on electronic-procurement readiness, provider performance records, and domestic-content status.
Providers should therefore consider reviewing whether their relevant products and services have been appropriately listed in the electronic catalogue, ensuring that qualification information in the procurement system remains accurate and current, and maintaining satisfactory performance records to preserve eligibility for future and repeat procurement opportunities.
For manufacturers and goods suppliers in particular, businesses should assess the TKDN classification and supporting documentation of their products, as the revised priority structure may directly influence the competitiveness and eligibility of products offered in government procurement.