REPUBLIKA.CO.ID, JAKARTA -- The government's policy to provide additional incentives in the form of exemption from import duties and sales tax on luxury goods (PPnBM) for imports of electric vehicles stipulated in Presidential Regulation (Perpres) No. 79 of 2023 is considered to be an attraction of investment in the electric vehicle (EV) sector.

Tony Blair Institute (TBI) Indonesia Country Director Shuhaela Haqim said the limited choice of affordable electric vehicle (EV) products in Indonesia was one of the factors hindering EV adoption rates. “We need to encourage efforts to bring EV options to people and build a homeland EV consumer base. Therefore, we see the incentive of 0 percent import duty and 0 percent PPNbm for CBU EV imports that the government recently rolled out as an attractive investment scheme for manufacturers,” he said in Jakarta, Thursday (11/1/2024).

According to Shuhaela, this incentive provides an opportunity for EV manufacturers to be able to build manufacturing facilities in Indonesia while piloting their EV products and building EV market share in the country. He said Thailand's implementation of a similar incentive scheme in 2022 proved to be an effective “bait” to boost sales of electric vehicles and attract investment from global electric car manufacturers.

“Thailand's incentive package has pushed electric car sales out of their total car sales from around three percent in 2022 to nine percent in 2023. A tremendous surge and the hope is that this can also be realized in Indonesia,” Shuhaela said.

It is known that the government provided an additional incentive package stipulated in Presidential Regulation (Perpres) No. 79 of 2023 on Amendments to Perpres No. 55 of 2019 on Acceleration of Battery-Based Electric Motor Vehicle Program (KBLBB) is expected to boost Indonesia's electric vehicle (EV) production capacity.

The decree provides for incentives in the form of import duties of 0 percent of imports, PPNBm of 0 percent and exemption or reduction of local taxes for KBLBB, all of which apply to imports of KBLBB in whole state (Completely Built-up/CBU) and Completely Knock Down (CKD) with TKDN less than 40 percent.

Through the legislation, EV manufacturers will be able to enjoy import incentive packages until the end of 2025. Furthermore, manufacturers are obliged to meet the terms of domestic EV production or “production debt” until the end of 2027, in accordance with the applicable TKDN provisions.

The additional incentive package is expected to support the acceleration of EV adoption by bringing more choice of EV product variations at more affordable prices for Indonesians.

As for earlier, the government has launched fiscal and non-fiscal incentives for consumers and producers. One form of incentive is a discount of Rp 7 million for all Indonesians who want to buy a new electric motorcycle that meets 40 percent of local component needs.

The implementation of the rules regarding such incentives has been enshrined in one of the derivatives of Perpres 79/2023, Regulation of the Minister of Investment/Head of BKPM Number 6 of 2023, which will be effective as of January 19, 2024.

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