JakartaPost-Dec 19, 2023
Indonesia, trailing its neighbors in the electric vehicle (EV) race, is stepping on the gas with a package of tax incentives aimed at revving up its domestic industry, a government official has said. The revised presidential regulation published on Dec. 12 offers a two-year window for automakers willing to build EV plants in the archipelago. A ministerial regulation governing the technicalities will be released by the end of December. Through the policy changes, the government will allow any automaker planning to set up EV plants in the country to import fully built-up (CBU) or completely knocked down (CKD) EVs without paying import duties or luxury goods value-added tax (VAT). Valid until the end of 2025, the exemptions are aimed at jump-starting the market before domestic production kicks into a higher gear. Moreover, the government has also loosened the reins on local content requirements. It now gives EV carmakers until 2026 to achieve the minimum 40 percent of domestically sourced components. “It’s a win-win for both Indonesia and investors,” Deputy Coordinating Maritime Affairs and Investment Minister Rachmat Kaimuddin said on Friday, expressing the hope that the new incentives would lure major EV automakers to set up shop in the country. Rachmat acknowledged the need to kick-start an “economy of scale” for the domestic EV market. “How can we offer incentives when there’s no market yet?” he said. Indonesia’s current EV production is dwarfed by that of peer countries. While Thailand boasts annual output of 240,000 four-wheelers, Indonesia has a modest manufacturing capacity of 34,000 cars, 2,480 buses and 1.45 million motorbikes, according to the ministry. Read more at: https://www.thejakartapost.com/business/2023/12/19/nickel-plan-sidelined-as-govt-pushes-ev-market-with-new-incentives.html.
