Three Global Car Manufacturers Commit to Electric Vehicle Production in Indonesia
Jakarta, The Gulf Observer: Indonesia has secured commitments from three major global automotive manufacturers to establish electric vehicle (EV) production facilities in the country, marking a significant step in the nation’s push to become a key player in the electric vehicle industry in Southeast Asia.
During a press conference on Monday, Industry Minister Agus Gumiwang Kartasasmita announced that Citroen, BYD, and AION, a French and two Chinese car manufacturers, would set up factories in Indonesia to primarily produce electric vehicles. The government is providing attractive incentives to encourage these investments, including zero import duties and a 15 percent government-subsidized luxury goods sales tax (PPnBM DTP).
“These companies will benefit from these incentives as part of our efforts to demonstrate Indonesia’s competitive and business-friendly regulations,” Kartasasmita explained. He emphasized that the incentives are aligned with the government’s objective to position Indonesia as a hub for battery electric vehicle (BEV) production in Southeast Asia.
In addition to supporting BEV manufacturing, the Indonesian government is also set to offer an incentive starting January 1, 2025, covering 3 percent of the luxury tax burden for hybrid vehicles. Currently, hybrid cars are subject to a luxury goods sales tax (PPnBM) ranging from 6 to 12 percent, while BEVs enjoy the benefit of zero PPnBM.
Furthermore, the government is introducing a 10 percent value-added tax (VAT) exemption for electric cars that meet a minimum domestic component level (TKDN) of 40 percent.
Kartasasmita highlighted that these measures underscore the government’s strong commitment to supporting the automotive sector, adding, “We are providing incentives and stimulus to foster growth and innovation in the manufacturing sector, particularly in the electric vehicle industry.”
With these initiatives, Indonesia is set to become a key destination for EV production in the region, boosting its automotive sector while advancing the transition to greener transportation.
