Indonesia Accelerates Electric Vehicle Adoption with Tax Incentives and Infrastructure Push
Jakarta, January 13, 2025 – indonesia is doubling down on its commitment to teh electric vehicle (EV) revolution, with the government rolling out targeted tax incentives to boost adoption and production. Coordinating Minister for the Economy Airlangga Hartarto announced a 3% Sales tax on Luxury Goods Borne by the Government (PPnBM DTP) for hybrid vehicles, a move designed to strengthen the EV ecosystem in the contry.
Speaking at the Indonesia Business council in South Jakarta, Hartarto emphasized the government’s support for the automotive sector. “Our automotive sector provides facilities,including for hybrids we provide a 3% hybrid (tax) discount,” he said. This incentive is part of a broader strategy to increase the share of EVs in Indonesia’s vehicle market, which currently stands at just 9% of total consumption.
The Current Landscape
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In 2024, Indonesia’s total vehicle production and consumption reached 850,000 units, with EVs and hybrids accounting for only 90,000 units. Hartarto acknowledged the challenges, particularly in infrastructure, but stressed the need to accelerate adoption. “We have to increase more,even though we know that infrastructure is one of the challenges,” he explained.
To address this, the government has introduced a tiered VAT DTP (Value-Added Tax on Delivery Tax Paid) system for Battery-Based Electric Motor Vehicles (KBLBB). Middle-class consumers will benefit from a 10% VAT reduction on certain four-wheeled EVs and EV buses with a minimum local content (TKDN) value of 40%. For EV buses with a TKDN value between 20% and 40%, the VAT reduction is set at 5%.
incentives for Domestic Production
Indonesia is also incentivizing domestic EV production. Imports of fully assembled (CBU) EVs will enjoy a 15% PPnBM DTP, while locally produced EVs (CKD) will receive the same benefit. Additionally, CBU EV imports are exempt from import duties, a policy already in affect.Spokesperson for the Coordinating Ministry for the Economy,Haryo Limanseto,elaborated on the measures. “PPnBM DTP EV is 15% on imports of certain four-wheeled KBLBB in full (CBU) and delivery of certain four-wheeled KBLBB originating from domestic production (CKD).Exemption from CBU EV Import Duty is 0%, according to the program that is already running,” he said.
A Growing Market with Enterprising Targets
Indonesia’s push for EVs aligns with its broader economic goals. By 2025, the country aims to have 2.1 million electric motorcycles and 400,000 electric vehicles on the road, with 20% manufactured locally. By 2030, these targets will rise to 2.2 million electric cars and 13 million electric motorcycles [[1]].
The government’s focus on downstream nickel processing, a critical component of EV batteries, further underscores its commitment to becoming a regional EV hub. With a total addressable market exceeding $20 billion, Indonesia’s EV transition is poised for rapid growth, though infrastructure development remains a key hurdle [[3]].
Key Incentives at a Glance
| Incentive type | Details |
|————————–|—————————————————————————–|
| PPnBM DTP for Hybrids | 3% tax discount on hybrid vehicles |
| VAT DTP for EVs | 10% for four-wheeled EVs and buses with TKDN ≥40%; 5% for TKDN 20%-40% |
| CBU Import Duty Exemption| 0% import duty on fully assembled EVs |
| PPnBM DTP for CKD EVs | 15% tax discount on locally produced EVs |
The Road Ahead
While the incentives are a step in the right direction, experts caution that Indonesia’s EV ambitions will require meaningful investment in charging infrastructure and public awareness campaigns. The government’s efforts to attract global players like BYD and GAC Aion highlight its determination to position itself as a key player in the global EV market [[2]].As Indonesia races toward its 2025 and 2030 targets, the success of its EV transition will depend on a coordinated effort between policymakers, industry players, and consumers. For now, the government’s tax incentives are a clear signal that the country is serious about driving the EV revolution forward.
Watch the video: Electric Motorcycle Racing Event, PLN EV Conversion Race 2024.
indonesia Accelerates Electric Vehicle Adoption with Tax Incentives adn Infrastructure Push
Jakarta,January 13,2025 – Indonesia is making significant strides in its electric vehicle (EV) revolution,with the government rolling out targeted tax incentives to boost adoption and production. Coordinating Minister for the Economy Airlangga Hartarto recently announced a 3% Sales tax on Luxury Goods Borne by the Government (PPnBM DTP) for hybrid vehicles, a move designed to strengthen the EV ecosystem in the country.To delve deeper into these developments, we sat down with dr. Arif Wijaya, an expert in sustainable transportation and EV policy, to discuss the implications of these incentives and the road ahead for Indonesia’s EV ambitions.
The Current State of Indonesia’s EV Market
Senior Editor: Dr. Wijaya, thank you for joining us. Let’s start with the current landscape. Indonesia’s EV market is still in its early stages, with EVs and hybrids accounting for only about 10% of total vehicle consumption. What are the key challenges holding back faster adoption?
Dr. Arif Wijaya: Thank you for having me. The challenges are multifaceted. First, there’s the issue of infrastructure. While the government has made strides in promoting EV adoption, the charging network remains underdeveloped, especially outside major cities like Jakarta. Second, there’s the cost factor. EVs are still relatively expensive for the average Indonesian consumer, despite the tax incentives. there’s a lack of public awareness and education about the benefits of EVs, which slows down consumer acceptance.
Senior Editor: The government has introduced a tiered VAT DTP system to address some of these cost barriers. Can you explain how this works and its potential impact?
Dr.Arif Wijaya: absolutely. The tiered VAT DTP system is a smart move. For four-wheeled EVs and buses with a local content (TKDN) value of at least 40%, consumers get a 10% VAT reduction. For those with a TKDN value between 20% and 40%, the reduction is 5%. this not only makes EVs more affordable but also encourages manufacturers to increase local production, which is crucial for building a sustainable EV ecosystem.
Incentives for Domestic Production
Senior Editor: Speaking of local production, the government is also offering a 15% PPnBM DTP for both imported fully assembled (CBU) EVs and locally produced (CKD) evs. How significant is this for Indonesia’s EV manufacturing sector?
Dr. Arif Wijaya: This is a game-changer. By offering the same tax benefit for both CBU and CKD EVs, the government is creating a level playing field that encourages global manufacturers to set up local production facilities. This not only boosts domestic manufacturing but also creates jobs and stimulates the economy. Additionally, the 0% import duty on CBU EVs makes it easier for manufacturers to test the market before committing to local production.
Senior Editor: Indonesia is also focusing on downstream nickel processing, a critical component of EV batteries. How does this fit into the broader EV strategy?
dr. Arif Wijaya: Nickel is a key ingredient in lithium-ion batteries, and Indonesia is one of the world’s largest nickel producers. By focusing on downstream processing, the country can capture more value from its natural resources and reduce its reliance on raw material exports. This not only strengthens the domestic EV supply chain but also positions Indonesia as a regional hub for EV battery production.
The road Ahead: Infrastructure and Public Awareness
Senior Editor: While the incentives are promising, experts caution that infrastructure advancement and public awareness are critical for the success of Indonesia’s EV transition. What steps should the government take to address these challenges?
Dr. Arif Wijaya: Infrastructure is indeed the linchpin. The government needs to accelerate the rollout of charging stations,especially in rural and semi-urban areas. Public-private partnerships could play a key role here. As for public awareness, we need extensive campaigns to educate consumers about the long-term benefits of EVs, not just in terms of cost savings but also environmental impact. Schools, universities, and community organizations should be involved in these efforts.
Senior Editor: Indonesia has set ambitious targets: 2.1 million electric motorcycles and 400,000 electric vehicles by 2025, and even higher numbers by 2030. Do you think these targets are achievable?
Dr. Arif Wijaya: The targets are ambitious but achievable if all stakeholders work together. The government’s incentives are a strong start, but we need sustained investment in infrastructure, continued support for local manufacturing, and a concerted effort to raise public awareness. If these elements come together, Indonesia has the potential to become a regional leader in the EV market.
Senior Editor: Thank you, Dr. Wijaya, for your insights. It’s clear that Indonesia’s EV journey is just beginning, but with the right policies and investments, the future looks promising.
Dr. Arif Wijaya: Thank you. I’m optimistic about Indonesia’s EV future, and I look forward to seeing how these initiatives unfold in the coming years.
Watch the video: electric Motorcycle Racing Event,PLN EV Conversion Race 2024.
