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Indonesia offers incentives for investors willing to build EV factories

Tempo - February 15, 2024

Antara, Jakarta – The Indonesian Government has prepared incentives for business players seeking to invest their capital to build factories of electric vehicles (EV) in Indonesia, Industry Minister Agus Gumiwang Kartasasmita stated.

"We have prepared incentives, so that Indonesia's competitiveness will be on par with Thailand's," he remarked after attending the Indonesia International Motor Show 2024 in Jakarta on Thursday.

According to Kartasasmita, Indonesia is currently home to EV factories of four foreign automotive companies. However, he deemed the production capacity of the factories as rather low.

"Indonesia houses four factories, each owned by Wuling, DFSK, Hyundai, and Chery. I think that the production capacity is still at a low level, as the factories can only produce under 100,000 EVs per year," he pointed out.

The minister then remarked that the existence of EV factories is of the essence to help Indonesia meet the target of market absorption of eco-friendly vehicles and compete at the international level.

He further noted that the Ministry of Industry would offer the incentives while continuing the implementation of the EV tax incentive program without neglecting the need to achieve the domestic component level (TKDN) target.

"We will continue to implement the program while continuing to pursue the TKDN target. However, we will now focus more on the local component of heavy batteries," he explained.

The Ministry of Industry has set targets for electric car sales, with 400,000 and 600,000 units expected to be sold by 2025 and 2030, respectively.

Through Investment Minister's Regulation No. 6 of 2023, the Indonesian Government offers exemption of import duty and sales tax on luxury goods related to the imports of electric cars in certain quantities.

The regulation is targeted at EV producers willing to develop their businesses in Indonesia.

Source: https://en.tempo.co/read/1833890/indonesia-offers-incentives-for-investors-willing-to-build-ev-factorie