Detailed interpretation

Source of news

According to Reuters, Indonesia has announced new incentives to encourage the sales of locally produced and imported electric vehicles (EVs), in order to promote the adoption of environmentally friendly cars and attract investments in the domestic EV industry.

Changes in policies

Following last December’s announcement of tax benefits for imported EVs, Indonesia has now introduced more detailed incentive measures.

According to regulations released on February 20th, Indonesia will eliminate luxury taxes on EVs by the fiscal year 2024 and remove import duties by the end of 2025. This year, Indonesia will also reduce the value-added tax for EV buyers from 11% to 1%, extending the expiring tax reduction policy until the end of 2023.

The purpose of the policy

The Indonesian government stated that these incentives aim to stimulate domestic demand for EVs while attracting investment from car manufacturers. Rachmat Kaimuddin, Deputy Coordinating Minister responsible for EV industry development in Indonesia, revealed that many EV manufacturers have disclosed their plans to introduce EVs in Indonesia since the government announced its intention to implement incentive measures.

Rachmat expressed during another press conference with journalists, ‘We hope these efforts can bring more affordable products.’

Future Goals

The Indonesian government aims to produce 600,000 electric vehicles domestically by 2030, which would be over a hundred times higher than electric vehicle sales in the first half of 2023.

Additionally, Indonesia hopes to become a center for electric vehicle production leveraging its abundant nickel reserves as nickel is an important material used in electric vehicle batteries.