Tangerang, 7 March 2024: The International Conference on Regulating Technology in Asia (ICRTA) hosted a special event on local content requirements (LCRs) at the Universitas Pelita Harapan (UPH) campus, jointly organised by ERIA and UPH. Approximately 300 participants, scholars, researchers, and experts convened to discuss LCRs, particularly within the Indonesian context.

Junianto James Losari, a Doctoral candidate at City University of Hong Kong and former Research Fellow at the Centre for International Law, National University of Singapore, chaired the event. He introduced LCRs, citing the book LCRs: Promises and Pitfalls edited by Dr Lili Yan Ing and Professor Gene M Grossman. LCRs are policies aimed at boosting domestic industries by mandating or aspiring to include local input in domestically sold final goods. Over time, LCRs have evolved to cover a number of practices and outcomes, including input shares, employment, firm ownership, research and development (R&D) location, and technology transfer.

Professor Fukunari Kimura, ERIA Chief Economist, highlighted the potential benefits and challenges associated with the evolving aspiration toward economic development. While such aspirations could lead to growth, he cautioned against potential costs, including supply shortages and price hikes in intermediate inputs, which could undermine the international competitiveness of downstream industries.

He also noted that the bureaucratic operation of LCRs could lead to complications and corruption, while large countries might revert to protectionist measures due to their sizable markets. To position better within global value chains (GVCs), Prof Kimura proposed policies such as trade and investment liberalisation, upgrading physical connectivity, and fostering healthy competition among foreign firms.

Scott Hanna, Chair of the Board of Governors at AmCham Indonesia, described LCRs as a double-edged sword for Indonesia. While aimed at boosting economic growth, supporting domestic industries, and fostering job creation, LCRs also present challenges for businesses in the country. Addressing these challenges requires a collaborative and strategic approach.

Dr Michelle Limenta, a UPH Lecturer, emphasised that while LCRs can protect domestic products and promote development, they may also limit input sources, increase production costs, and result in economic inefficiencies. She said World Trade Organisation (WTO) disciplines prohibit certain forms of LCRs, underscoring the need for adherence to multilateral trade laws and caution in relying solely on LCRs in industrial policy.

The discussions underscored the complex nature of LCRs and the importance of balanced policies to promote economic development, while ensuring competitiveness and adherence to international trade regulations.

Following the conference, Dr Yessi Vadila presented a copy of the book on LCRs to Dr Michelle Limenta as a symbolic gesture intended to disseminate information to students at UPH. Dr Yessi also presented a copy of the book to Dr Jerry Sambuaga. ERIA's open-access publications were also showcased at its booth during the event.

Publication: Local Content Requirements: Promises and Pitfalls