Indonesia plans incentives to boost EV adoption and production, tax based on fuel economy and emissions

Indonesia plans incentives to boost EV adoption and production, tax based on fuel economy and emissions

We’ve seen India ramp up incentives to boost electric vehicle adoption in the form of GST reduction and income tax deduction, now another populous developing nation is attempting the same. Bloomberg reports that Indonesia is planning incentives for both EV manufacturers and motorists to help boost a sector which has already seen investment from Toyota and Japan’s SoftBank, among others.

According to Bloomberg, which has seen the draft government strategy, the measures are aimed at accelerating the adoption of battery-powered cars in Indonesia and building a base for the production and export of EVs. They include lower taxes for manufacturers and buyers of the cars, and benefits for EV owners, such as special parking areas.

It is said that the draft is only awaiting president Joko Widodo’s approval. He is set to sign the new rules into force “very soon”, finance minister Sri Mulyani Indrawati said earlier this week.

The new rules would change the way vehicles are taxed in Indonesia, from body type and engine size to fuel consumption and CO2 emissions. This would favour electrified vehicles. The report drew a comparison between a BMW X3 and a Toyota Camry Hybrid; the SUV attracts a lower luxury tax rate than the cheaper Camry, because sedans are considered a more luxurious car type under the current rules.

According to the draft, the upcoming rules will also require carmakers to gradually increase the amount of locally produced parts to 80% by 2029. Motorcycle producers would need to reach that level in 2026.

Indonesia is a large market with huge potential, and the money has already started pouring in. Market dominating Toyota has said it plans to spend US$2 billion to build hybrid vehicle plants in the republic; while Hyundai is set to build two plants, including an EV one, by investing US$1 billion.

Indonesia plans incentives to boost EV adoption and production, tax based on fuel economy and emissions

SoftBank, a big money backer of Grab, said this week it will invest US$2 billion in Indonesia through the regional ride-hailing giant over the next five years. It also plans to explore investment opportunities in the country’s EV, battery and renewable energy sectors.

Along with India and the traditional “Detroit of the East”, Thailand, Indonesia is vying to be the main Asian market and base for electric cars outside of China. Indonesia wants EVs to make up a quarter of its car production by 2030.

What’s Malaysia’s automotive plan for the near future? The revised National Automotive Policy (NAP), which was reported to be under review in June 2018, was expected to be announced in Q1 this year. In April, the government announced that the revised policy announcement would be done in the second quarter. We’re now in Q3.

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Danny Tan

Danny Tan loves driving as much as he loves a certain herbal meat soup, and sweet engine music as much as drum beats. He has been in the auto industry since 2006, previously filling the pages of two motoring magazines before joining this website. Enjoys detailing the experience more than the technical details.



  • Crony on Aug 01, 2019 at 10:55 am

    PH Government still waiting for unknown cronies to come in with mysteriously acquired billions of RMs or fantastically suddenly halal Arab sheikh money up to Trillions of RMs begging to come and invest here.

    And then we have ‘genius’ ministers telling us we will have flying cars by 2020. By the next election, we will be promised a flying unicorn per person mark my words.

    Compared to this superb plan, what is puny Indonesia plan? Pfft!

    Like or Dislike: Thumb up 28 Thumb down 0
    • Vader on Aug 01, 2019 at 11:50 am

      Madani 2014 plan dah superb. Rindu maslan&co.

      Like or Dislike: Thumb up 7 Thumb down 1
    • Norlia on Aug 01, 2019 at 12:21 pm

      For inexplicable reasons probably a mystery to me, I would be persuaded to vote them again. So I am hoping my unicorn comes with rainbow option.

      Like or Dislike: Thumb up 4 Thumb down 0
    • Not Toyota Fan on Aug 01, 2019 at 1:01 pm

      Make my flying unicorn pink. Want to stand out from the crowd. Syukur Msia Aman.

      Like or Dislike: Thumb up 4 Thumb down 0
  • The Saint on Aug 01, 2019 at 11:00 am

    IMHO, Malaysia has lost its attractiveness to attract foreign automotive investments a long long time ago.

    We could have been the Detroit of the East and the automotive hub of SEA but we are now languishing behind Thailand and Indonesia in the automotive industry. I believe Vietnam will overtake us in TIV in 5 years, if not sooner.

    I am sad………….

    Like or Dislike: Thumb up 11 Thumb down 0
  • Meanwhile in Malaysia, the cars here are taxed based on engine capacity. This is an outdated system designed to protect Proton & Perodua.

    Unfortunately, Proton & Perodua used this ‘Tongkat’ to maximize their profit instead of improve themselves to compete against the global market, Short Term vs Long Term.

    I don’t think this will ever change as we all know that current Proton & Perodua cars are not that fuel efficient or that environmental friendly to begin with.

    Like or Dislike: Thumb up 7 Thumb down 1
  • EnergyAnalyst on Aug 01, 2019 at 12:06 pm

    One thing we will not have compare to India and Indonesia is SCALE.

    We need to fight a different game. E.g. Supercar EV or from premium brands like JLR , Porsche, etc.

    Like or Dislike: Thumb up 1 Thumb down 2
  • Copy Paste on Aug 01, 2019 at 12:18 pm

    Copy paste: “Meanwhile back in Boleh-Land, the Gomen gives our tax monies to front company who are dreaming of building super cars lah, flying car-pet lah, imaginary cars lah, before long, even flying unicorn. Syukur Msia Aman.”

    Like or Dislike: Thumb up 7 Thumb down 0
  • Not Toyota Fan on Aug 01, 2019 at 12:59 pm

    Meanwhile back in Boleh-Land, Ah Loke is busy selling number plates, make money to impress Tun.

    Plans for the future? Improve the system? Update the archaic laws and regulations? Nah, not important bro. We sell more number plates.

    Like or Dislike: Thumb up 7 Thumb down 0
    • Ahmadjr on Aug 01, 2019 at 10:05 pm

      Ah loke dengan yeo bee yin boleh duduk serumah. Mula2 bukan main semangat nak bela rakyat last2 dengar cakap tokey2 besar juga

      Like or Dislike: Thumb up 3 Thumb down 0
  • Turn M on Aug 01, 2019 at 2:06 pm

    Yes… All is going according to keikaku.

    Like or Dislike: Thumb up 3 Thumb down 0

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