Indonesia may finally be moving beyond Decree 1010

For more than two decades, Indonesia’s pharmaceutical sector has operated under the shadow of Decree 1010, a regulation that effectively tied market access to local manufacturing and technology transfer requirements.

This week’s new Ministry of Health Regulation, Permenkes No. 5/2026, may signal the beginning of a different approach.

And for many pharmaceutical companies, that is welcome news.

A long-debated policy

For years, the International Pharmaceutical Manufacturers Group (IPMG) and many industry stakeholders argued that Decree 1010 created significant barriers for multinational pharmaceutical companies.

The core criticism was simple:

Indonesia wanted more investment, more technology transfer, and stronger local manufacturing capacity; but the policy itself may have discouraged exactly the companies capable of bringing those investments.

Despite more than 20 years of localization requirements, Indonesia has not seen a major structural increase in high-value pharmaceutical foreign direct investment (FDI) or advanced manufacturing capability.

That is likely one reason why this new regulation feels different.

What has actually changed?

The most important shift is that the new regulation no longer explicitly says foreign pharmaceutical companies must establish local manufacturing facilities or contract manufacturing arrangements in order to obtain marketing authorization (Izin Edar).

Instead, the Government appears to be moving toward a more flexible model:

• imported medicines can still enter the market;
• localization can happen progressively;
• and technology transfer is expected through a phased roadmap approach.

In practical terms, Indonesia seems to be moving from:

localize first, access later

to:

access now, localize over time.

That is a meaningful policy evolution.

Why this matters for public health

From a public health perspective, this matters because overly rigid localization rules can unintentionally delay access to innovative medicines.

The new framework appears to recognize that reality.

Permenkes No. 5/2026 explicitly allows imported medicines, particularly:

• Innovative therapies,
• Public health program products, 
• and Medicines not yet manufacturable domestically.

At the same time, the regulation still pushes for eventual domestic production and technology transfer within a five-year timeframe.

This is a more pragmatic balance between:

• Industrial policy,
• Health security, 
• and Patient access.

COVID-19 clearly shaped this regulation

One thing that stands out throughout the regulation is how strongly it reflects post-pandemic thinking.

The Government is clearly prioritizing:

• Supply chain resilience,
• Strategic reserves,
• Emergency procurement mechanisms,
• Accelerated approval pathways,
• and Domestic production continuity during crises.

This is less about classic protectionism and more about national health preparedness.

But challenges remain

That said, the regulation does not eliminate uncertainty.

Indonesia still strongly prioritizes:

• Domestic manufacturing,
• Local content requirements (TKDN),
• and Import substitution policies.

And several important questions remain unanswered:

• How strictly will the five-year localization rule be enforced?
• What qualifies as sufficient technology transfer?
• How will patented or highly specialized therapies be treated?
• Will innovative low-volume products receive flexibility?

Much will ultimately depend on implementation.

What pharmaceutical companies should be thinking about now

For existing players, this may be the right moment to rethink Indonesia strategies beyond purely defensive localization models.

Companies may increasingly explore:

• phased manufacturing partnerships,
• selective technology transfer,
• regional supply chain integration,
• or hybrid import-localization models.

For new entrants, the regulation may lower some historical barriers to market entry; especially for innovative and specialty products.

But long-term success in Indonesia will still require alignment with the country’s broader health sovereignty agenda.

Final thought

Indonesia is not abandoning pharmaceutical nationalism.

But it may be modernizing it.

The real test now is whether implementation becomes pragmatic, predictable, and collaborative enough to improve both:

• Investment confidence,
• and Patient access.

That will determine whether Permenkes No. 5/2026 becomes a genuine turning point; or simply a softer version of the same policy framework.