The government of Indonesia has recently announced a series of new incentives targeted at boosting the sales of electric vehicles (EVs), both those manufactured locally and those that are imported. This move is part of a larger strategy to increase the prevalence of green automotive options within the country and to attract greater investment into Indonesia’s burgeoning electric vehicle industry. These incentives represent the latest phase of a tax relief plan that was unveiled in December, which was specifically designed to encourage electric vehicle manufacturers to match the volume of their imported vehicles with an equivalent number of domestically produced electric vehicles in the coming years.
As part of the newly announced regulations, Indonesia has declared that it will be abolishing the luxury tax on electric vehicles for the fiscal year 2024. Additionally, the import tax on electric vehicles will be waived until the conclusion of 2025. The government will also be implementing a drastic reduction in the value-added tax for those purchasing electric vehicles, from an existing 11 percent down to just 1 percent. This reduction in tax will be in effect for the current year and is an extension of a tax break that was originally set to expire at the end of 2023.
The primary aim of these incentives is to stimulate domestic demand for electric vehicles and to attract investment from automobile manufacturers, according to the Indonesian government. Rachmat Kaimuddin, a coordinating deputy minister overseeing the development of the electric vehicle sector, has reported that numerous electric vehicle manufacturers have expressed plans to launch their vehicles in Indonesia following the government’s announcement of these incentives.
Last month, China’s BYD, currently acknowledged as the world’s largest electric vehicle maker based on sales volume, revealed three new models of fully battery electric vehicles that it plans to market in Indonesia. “We hope that these efforts can lead to the creation of even more products and make them more accessible,” Rachmat stated during a press briefing. The Indonesian government has set an ambitious target of producing 600,000 electric vehicles domestically by the year 2030. This figure is over 100 times the number of electric vehicles that were sold in Indonesia during the first half of 2023.
