The Indonesian government is in talks with various industry players and regulators to create incentives for electric vehicles (EVs).
The talking stage
According to the Minister of Finance Purbaya Yudhi Sadewa, the government is discussing EV incentives for 2026 with organisations and industry players, including the Association of Indonesian Automotive Industries or GAIKINDO.
“GAIKINDO invited us to attend the car exhibition, but also to discuss, for example, what incentives are needed for electric cars and so on,” Purbaya said.
He noted that discussions are still ongoing and nothing has been finalised yet.
Purbaya also mentioned that he is working closely with Minster of Industry Agus Gumiwang Kartasasmita for incentives on electric two-wheelers. Agus made a similar statement regarding electric motorcycle incentives. According to the Minister, the government aims to increase the rate of electric motorcycle adoption among its citizens.
Agus relayed Indonesian President Prabowo Subianto’s new directive on encouraging EV adoption to reporters.
“[T]he importance of doing so is increasingly apparent, reducing our dependence on fossil fuels. So, there really is no other choice but to convert to electricity,” he said.
The Indonesian president announced last week that Indonesia will begin mass production of EVs, specifically sedans, by 2028.
Slow progress
In September last year, the Indonesian government announced that it would no longer provide financial incentives for imported BEVs starting 2026. In February, a proposal was submitted to the Ministry of Finance to create a new set of financial incentives for EVs for 2026. So far, there have been no updates regarding the progress of this report.
The proposal recommended restoring financial incentives for the Luxury Good Sales Tax (PPnBM) and Value Added Tax (VAT). Aside from luxury goods and residences, the PPnBM tax also applies to vehicles purchases with rates dependant on factors such as vehicle passenger capacity, engine, and more.
Though incentives haven’t been confirmed for 2026, the tax incentive for low-cost green cars (LCGC) will remain available until 2031. However, Setia stated that tax incentives for vehicles that are not considered “low cost” are still under discussion.
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