Indonesia has announced new incentives to encourage sales of locally produced and imported electric vehicles (EVs), in its latest bid to boost the take-up of environmentally friendly cars as well as attract investment to its domestic EV industry.
The detailed incentives are a follow-up to a December-announced tax incentives plan for imported EVs for manufacturers that match import numbers with domestically made EVs in coming years.
Under new rules made public late yesterday, Indonesia will remove the luxury tax on EVs for the 2024 fiscal year and import tax until the end of 2025.
It will also lower value-added tax to one per cent, from 11 percent for EV buyers this year, extending a tax break that had expired at the end of 2023.
The government has said the incentives are aimed at stimulating domestic demand for EVs while attracting investment by automakers.
Many EV makers have disclosed plans to launch vehicles in Indonesia since the government announced its intention to introduce incentives, said Rachmat Kaimuddin, deputy coordinating minister overseeing EV sector development.
Last month, China’s BYD, the world’s biggest EV maker by sales volume, unveiled three all-battery EV models it plans to sell in Indonesia.
“Hopefully, these efforts can result in even more products and make them more affordable,” Rachmat told the press at a separate briefing.
The government aims for 600,000 EVs to be domestically produced by 2030. That would be more than 100 times the number sold in Indonesia in the first half of 2023.
It also aims to become an EV production hub, leveraging the country’s vast nickel reserves, an important material for EV batteries.
