Starting from the 15th of January, 2023, the government will waive import duties and luxury goods tax on completely built-up (CBU) electric car imports. Nonetheless, manufacturers must fulfill certain requirements in order to qualify for this incentive.
This is outlined in the Decree of Minister of Investment/Head of the Investment Coordinating Board No. 6 of 2023 concerning Guidelines and Governance for the Granting of Incentives for the Import and/or Delivery of Four-Wheeled Battery-Based Electric Motor Vehicles to Accelerate Investment.
According to Article 2 of the regulation, businesses can receive incentives for imports, with a commitment to producing four-wheeled battery-based electric motor vehicles in Indonesia no later than January 1, 2026. The production of electric cars must comply with the government-set rules on domestic component levels (TKDN).
“Meet the minimum TKDN achievement target as stipulated in the presidential regulation regarding the acceleration of battery-based electric motor vehicle programs for road transportation,” the investment ministry said on Tuesday.
While the import incentives, which include duty-free imports and value-added tax (VAT) exemptions, are applicable until the end of 2025, the government will impose sanctions if manufacturers fail to meet the promised deadlines.
The industries eligible for these incentives include:
- Companies in the automotive industry planning to build manufacturing facilities for battery-based electric motor vehicles in Indonesia;
- Companies in the automotive industry that have invested in facilities for internal combustion engine-based four-wheeled motor vehicles in Indonesia and plan to shift production to battery-based electric vehicles, either entirely or partially;
- Companies in the automotive industry that have invested in facilities for battery-based electric motor vehicles in Indonesia as part of introducing new products by increasing production plans and/or capacity.
Previously, the Chinese electric car manufacturer BYD expressed its readiness to enter the Indonesian market in the first half of 2024. BYD is optimistic that its electric cars will be well-received in Indonesia, considering the country’s robust automotive growth.
The company believes its electric vehicles can compete with internal combustion engine (ICE) or conventional combustion engine cars. According to recent data from the eco-friendly technology site CleanTechnica, BYD’s electric cars topped the global sales list for October 2023.
