Electric Vehicle Policy Initiatives for Local Industry Development

The Indonesian government reaffirms its support for the development of the electric vehicle (EV) industry through Presidential Decree No. 55/2019, designating EVs as a national priority. This move aligns with efforts to enhance energy efficiency and embrace clean energy sources.

The decree introduces fiscal incentives, including import duty exemptions for Completely Knock Down (CKD) and Incompletely Knock Down (IKD) EVs, as well as tax incentives based on EV emissions and engine capacity. Non-fiscal incentives involve exemptions from road usage restrictions and government-held production rights for EV technologies.

The Parliament is currently discussing a renewable energy bill to support clean energy sources, providing incentives for sustainable technologies and research, further encouraging the adoption of EVs.

Additionally, the government has implemented rules eliminating down payment requirements and easing credit regulations for the purchase of green vehicles, aiming to enhance loan accessibility for electric car buyers and stimulate EV demand.

Further steps include the halt of raw nickel ore exports to ensure an adequate supply for domestic battery plants. Indonesia is strategically developing an integrated EV supply chain by attracting automotive manufacturers, establishing a state-owned battery company, and boosting lithium-ion battery production. A local focus is evident in plans to retrofit existing motorcycles with electric engines, mitigating job losses caused by the transition away from internal combustion engines in local manufacturing.

 

Source: KPMG Indonesia


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