Executive Director of the Indonesian Resources Studies (IRESS) Marwan Batubara said there was a conflict of interest in the policy because Luhut, as a minister, has had an affiliation with an electric vehicle (EV) producer.

"The ruler is too greedy. Just because he has the power, he made a regulation in such a way to subsidize [the purchase of electric vehicles] by using the state budget. He does not care," Batubara told Indonesia Business Post on March 8, 2023.

Read also: Government to subsidize electric motorcycles to boost conversion of new energy

As reported by CNNIndonesia.com, a joint venture between PT TBS Energi Utama Tbk (TOBA) and PT Goto Gojek Indonesia Tbk (GOTO) Electrum would be ready to produce electric motorcycles in 2024. TBS Energi Utama has provided US$ 350 million as capital for the project.

TBS Energi Utama, previously named Toba Bara Sejahtera was owned by Luhut. In 2017, local media reported that Luhut had sold his majority shares in TBS Energy Utama to Singaporean company Highland Strategic Holding Pte for IDR 1.07 trillion (US$ 69.25 million). However, Luhut's nephew Pandu Syahrir is still the Vice President Director of TBS Energi Utama and CEO of Electrum.

Conflict of interest

Batubara explained that if the government wanted to involve in strategic industry and an industry that affects the life of the people, it should encourage state owned enterprises to involve in the EV industry including electric motorcycles.

"The Surabaya's 10 November Institute of Technology (ITS) has been developing the electric vehicles industry for more than 10 years. They can cooperate with several industries. We should not give an opportunity for private companies, conglomerates and companies that have affiliations with state officials," he said.

He said there was a ban on government officials to involve in business. He also urged members of the House of Representatives to voice their objections on the policy. "Do not make whatever policy that they want. That's not the right way to give incentives for the industry," he said.

Read also: TBS Energi Utama shifts focus to non-coal business

Batubara also said that it was reasonable if the government gave incentives to the electric vehicle industry in the form of tax incentives. "They cannot use state money to give incentives for private companies and companies belonging to state officials," he said.

An expert at the Indonesian Political Economy Association (AEPI), Salamuddin Daeng, said that the conflict of interest has made the energy transition not populist and not legitimate. "Indonesia is controlled by dirty energy bandits who have utilized power for their business. It is difficult to prove it but that's the behavior of Indonesia's political oligarch," he added.

The Spokesman of Luhut's office, Jodi Mahardi, denied the presence of the conflict of interest.

"We are competing with other countries, which also try to persuade potential investors in the EV industry to help develop and boost the number of electric motorcycles or electric car users. The technical ministries determine the incentives [for investors]," he told the Post.

The government will start providing subsidies for battery electric vehicles (BEVs) on March 20, 2023, to help spur the new energy automotive industry development. The subsidy is the government’s first step to allowing price affordability and people’s purchasing power to buy BEVs.