<![CDATA[This study investigates whether Indonesia’s import-duty exemption policy on machinery and industrial automation governed by firm-level masterlists under PMK 176/2009 (amended in PMK 76/2012 and PMK 188/2015) and implemented under the revised customs tariff BTKI 2022 with effect from 1 April 2022 increases operational performance of manufacturing firms listed on the Indonesia Stock Exchange (IDX). Using a Difference-in-Differences (DiD) method, we compare firms in automation-intensive industries with less-affected industries during the pre-policy period (2019–2021) and post-policy period (2022–2024). Secondary firm-level data extracted from company annual reports form variables capturing productivity and efficiency: revenue per staff, asset turnover, return on assets (ROA), cost of goods sold (COGS) ratio, CAPEX-to-assets ratio, and additions to machinery & equipment. Treatment exposure is estimated in two ways: (1) sectoral eligibility based on BTKI Chapters 84–85 (mechanical and automation equipment) and selected Chapter 90 headings and (2) realized adoption, identified from sharp increases in machinery investment with narrative confirmation of automation or foreign machinery in the masterlist. The import-duty exemption for machinery and automation appears to have achieved its primary goal of stimulating investment and improving cost-efficiency among Indonesian manufacturing firms, but the broader outcomes of productivity and profitability require a longer horizon and more supportive ecosystem. Policymakers should therefore view such exemptions as first-order instruments that unlock investment, but not endpoints in themselves. To optimize the value, this should be embedded within a broader range of strategy such as in workforce development, digital transformation, institutional support, and continuous evaluation throughout the process.]]>
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