The Indonesian government released details of new regulations, signed December 8th, designed to attract investors looking to build electric vehicle (EV) plants in the country.
The new regulations will grant automakers that plan to build electric vehicle plants tax incentives on their imports of completely built EVs until 2025.
Under the plan, companies that have already invested in EV plants, intend to boost their EV investments, or have plans for future investments in this sector would qualify for the incentives.
The updated regulations will eliminate import duties and luxury-goods sales tax on fully assembled vehicles imported into the country. Additionally, these rules offer tax incentives tied to taxes collected by provincial governments.
Previously, these incentives were exclusively allocated to imports of knocked-down vehicles—vehicles delivered in parts and then assembled within the country of sale.
Nevertheless, the quantity of vehicles companies can import will be contingent upon the scale of investment and the developmental progress of the plant. Import volumes must also receive approval from the investment ministry.
"We try to be progressive, because once we have created an EV industry in Indonesia, the battery (industry) will also come, and we already have the (raw) material and can create the supply chain," said Rachmat Kaimuddin, a deputy at the Coordinating Ministry of Investment and Maritime Affairs.
The updated regulations also extended deadlines relating to the production of EVs in Indonesia. The requirement for companies to manufacture a minimum of 40% of EV content within the country has been postponed from 2023 to 2026.
Additionally, the plan has pushed back an increase of the local content threshold to 60%. Instead of the original goal of achieving this by 2024, it has been rescheduled to 2027.
Indonesia's government has set an ambitious goal of manufacturing approximately 600,000 electric vehicles in the country by 2030. 100 times the number of EVs sold in Indonesia during the first half of 2023.