Air Conditioner Manufacturers Scramble as Import Restrictions Take Effect, Without Domestic Compressor Factories

JAKARTA – The Indonesian Refrigeration Company Association (PERPRINDO) has been in a state of uncertainty since the implementation of import bans and restrictions on electronic goods, including the raw materials needed for domestic production. Technical considerations (Pertek) as a requirement for import recommendations stipulated in Minister of Industry Regulation No. 6/2024, derived from Minister of Trade Regulation 3/2024, have become a source of concern for business actors due to what they perceive as inadequate mechanisms. Darmadi Durianto, Chairman of PERPRINDO’s Board of Trustees, stated that the Pertek application process in the regulation should only take 5 working days. However, many businesses have yet to receive Pertek to date. This situation obstructs the procurement of component products such as air conditioner (AC) compressors, which have not been domestically produced. PERPRINDO evaluates that the Pertek mechanism is still chaotic and requires evaluation. “It is ineffective for the government to restrict AC product imports to support the domestic industry when the domestic industry itself is not ready,” said Darmadi on Wednesday (17/4/2024). Darmadi emphasized that Indonesia currently does not have compressor factories, so the domestic AC industry still needs to import compressors to produce local ACs. He argued that import restrictions would complicate investment inflow due to the difficulty in obtaining raw materials domestically, especially with lengthy import licensing processes. “We believe that to make Minister of Industry Regulation 6/2024 more effective, the government must support the establishment of supporting AC production industries such as compressor factories in Indonesia,” he said. For now, Darmadi urged the government to support manufacturers that have invested in building AC factories such as DAIKIN, SHARP, AQUA HAIER, and other foreign electronic manufacturers such as MIDEA, HISENSE, and GREE, which have relocated their production to Indonesia and collaborated with local factories. “They have relocated their production to Indonesia in collaboration with local factories, but they are still facing difficulties in Pertek application, where until now, their Pertek has not been approved, even though Minister of Industry Regulation 6/2024 stipulates that Pertek should be approved within 5 working days,” he explained. On the other hand, he acknowledged the good intentions of Minister of Industry Regulation 6/2024 to support the domestic industry. However, the government is deemed to need to be wiser in assessing the readiness of the domestic industry to meet its production needs. Darmadi expressed concern that if Minister of Industry Regulation 6/2024 is not implemented properly, it will impact the domestic AC market, which cannot be fulfilled due to supply shortages. Moreover, the chaotic implementation of import restrictions and Pertek could also cause many foreign investors to flee due to uncertainty about investing in Indonesia. “Perprindo hopes that the implementation of Minister of Industry Regulation 6/2024 can be carried out properly, namely Pertek can be issued within 5 working days,” he concluded.