Published on 03/07/2023 at 18:06 GMT+7 Reading time
The government's requirement of 40 percent mandatory domestic component ratio (Tingkat Komponen Dalam Negeri - TKDN) for electric vehicle manufacturers to receive incentive is considered to be too low.
An economic energy analyst from Gadjah Mada University (UGM), Fahmy Radhi, argued that the mandatory TKDN requirement should be increased to 85 percent.
Domestically manufactured
In addition to high TKDN, production must also be carried out in Indonesia. Furthermore, Fahmy emphasizes the importance of technology transfer and knowledge transfer to Indonesian human resources.
Fahmy states that these requirements need to be encouraged as a means to build a domestic electric vehicle ecosystem. He hoped that within the next five years, Indonesia can produce its own electric vehicles.
"That should be the target. Otherwise, we will forever remain just a market for electric vehicles," Fahmy said.
Conventional vehicle restriction not a good move
Fahmy also stated that making it more difficult to purchase conventional vehicle may lead to a blunder. Recently, Coordinating Minister for Maritime and Investment Affairs Luhut Binsar Pandjaitan planned to impose restrictions for people wanting to buy fossil-fueled vehicles.
Fahmy argued that restrictions on the purchase of conventional vehicles cannot be implemented through policies in a free market. Moreover, if the opposite occurs and the purchase of electric vehicles is facilitated, it could create new problems.
"This will disrupt the market and certainly face resistance from Japanese manufacturers who produce conventional vehicles," he said.
Previously, Luhut stated that restricting the purchase of fossil fuel-based vehicles could encourage the future purchase of electric vehicles. This applies not only to the vehicles themselves but also to the entire supporting ecosystem.
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