The Indonesian government is yet to confirm automotive incentives for the upcoming year.
PROPOSAL SENT
Director General of Indonesia’s Metal, Machinery, Transport Equipment, and Electronics Industry, Setia Diarta, said that a proposal has already been sent to the Ministry of Finance. Diarta referred to a proposal sent by Minister of Industry Agus Gumiwang Kartasasmita to the Minister of Finance last year.
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.
BEV INCENTIVES END
In September last year, the government announced that they would no longer provide incentives for completely built-up (CBU) battery electric vehicles (BEV) for the following year. The move encourages manufacturers to produce vehicles domestically rather than importing them.
According to Minister of Economy Airlangga Hatarto, several automakers have already invested in building their own facilities in Indonesia. These brands include VinFast, BYD, and Hyundai. Hatarto stated that these companies’ investments will be allocated towards the country’s national car program.
NATIONAL SALES DECLINING
The presence of financial incentives will play a big role in Indonesia’s vehicle sales for 2026, with new vehicle sales steadily falling in the past 12 months. Data from the Association of Indonesia Automotive Industries (GAIKINDO) revealed that Indonesia’s overall car sales for 2025 reached 803,687. For 2025, yearly sales fell by 7.2 per cent compared to 2024.
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