The electric vehicle industry in Indonesia has been designated as a strategic sector so that foreign investors can immediately qualify for various incentives, including multi-year tax exemption and exemption from import duties, depending on the level of investment and whether goods are allocated for export or domestic sales. Government financial support is available for research and construction of charging facilities. Investors can also negotiate other incentives and ad hoc terms related to land, labor and infrastructure with local governments.
The government and media have reported many planned EV-related production facilities in the past three years, most of which are joint ventures between local and foreign companies. Many of these investments were made by foreign mineral refining and chemical production companies and related to battery production.
The electric vehicle industry at the bottom of the supply chain is HKML Indonesia, which is located in Karawang New Industrial City, West Java. The government announced the project as Indonesia's first EV manufacturing plant, and mass production is scheduled to start in the first half of 2024. The factory is a joint venture between a South Korean consortium (which includes carmaker Hyundai and electronics company LG) and the Indonesian Battery Industry (Indonesian). Battery Corporation, or IBC, which is owned by four state-controlled companies).