Indonesia has introduced fresh incentives to promote the sales of both domestically produced and imported electric vehicles (EVs), signaling its commitment to fostering a greener automotive sector and attracting investment to its burgeoning EV industry.
The latest incentives build upon a tax incentive plan for imported EVs announced in December, which rewards manufacturers matching import numbers with domestically made EVs in the coming years.
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Outlined in new rules released late on Tuesday, Indonesia will eliminate luxury tax on EVs for the 2024 fiscal year and waive import tax until the end of 2025. Additionally, it will reduce the value-added tax for EV buyers this year from 11% to just 1%, extending a tax break that had lapsed at the close of 2023. These incentives are intended to drive domestic EV demand and entice automakers to invest in the country.
“Many EV makers have disclosed plans to launch vehicles in Indonesia since the government announced its intention to introduce incentives,” stated Rachmat Kaimuddin, deputy coordinating minister overseeing EV sector development. He highlighted China’s BYD, the world’s largest EV maker by sales volume, which recently unveiled three all-battery EV models planned for sale in Indonesia.
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Rachmat expressed hope that these efforts would lead to a broader range of products and make them more accessible to consumers.
The Indonesian government aims to have 600,000 domestically produced EVs by 2030, a stark increase from the modest number sold in the country during the first half of 2023. Additionally, Indonesia aims to position itself as an EV production hub, leveraging its vast nickel reserves, a critical material for EV batteries.
