Challenges to Sustainable Domestic Component (TKDN) Implementation in Government Building Projects in Indonesia: An SEM–PLS Approach

Sustainable public procurement has become an important instrument for strengthening domestic industries, improving supply chain resilience, and supporting sustainable infrastructure development. In Indonesia, the Domestic Component Level (TKDN) policy plays a central role in promoting the use of locally manufactured products in government construction projects. However, successful domestic component implementation remains challenging because it is influenced by interrelated institutional, technical, managerial, and organizational factors. This study investigates the critical success factors associated with domestic component implementation and develops a refined structural implementation model for government building electrical projects in Indonesia. A quantitative research approach was employed using Partial Least Squares Structural Equation Modeling (SEM–PLS). Data were collected from 210 professionals involved in government building electrical projects, including contractors, consultants, project owners, procurement practitioners, and government representatives. The refined structural model demonstrates substantial explanatory capability, with an R2 value of 0.708 (Adjusted R2 = 0.700), indicating that the investigated constructs collectively explain 70.8% of the variance in Domestic Component Implementation Success. Government Policy emerged as the strongest positive determinant (β = 0.604; p < 0.001), followed by Electrical Equipment (β = 0.312; p < 0.001). In contrast, Electrical Materials (β = 0.141; p = 0.064), Electrical Work Cost (β = 0.075; p = 0.362), and Labor Capability (β = −0.089; p = 0.200) did not demonstrate statistically significant direct effects. Equipment Mobilization showed a statistically significant negative relationship (β = −0.154; p = 0.030), which was inconsistent with the hypothesized positive direction. The findings indicate that successful domestic component implementation is primarily associated with strong institutional support and the technical readiness of domestic electrical equipment, while the remaining factors may operate as supporting or context-dependent conditions. The study contributes by developing an empirically grounded structural implementation model that provides practical guidance for policymakers, domestic industries, and construction stakeholders seeking to strengthen sustainable public procurement, domestic industrial capability, and infrastructure development.