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Govt begins to roll out import duty relief on electric vehicles
This fiscal policy, which will last until 2025, aims to support the green transition by attracting investment, boosting domestic EV production and accelerating the EV program.
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A BYD Seal is seen at its launch in Jakarta on Jan. 18, 2024. (JP/Aditya Hadi)
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n a move to accelerate its transition from fossil fuels to sustainable energy, the government has officially rolled out a new regulation exempting electric vehicles (EVs) from import duty until the end of 2025.
This fiscal policy, issued by the Finance Ministry, aims to support the green transition by attracting investment, boosting domestic EV production and accelerating the EV program.
The prevalent issue with developing the EV sector in Indonesia is the limited charging infrastructure. While the Office of the Coordinating Maritime and Investment Minister plans to address this issue, it is prioritizing attracting EV manufacturers first.
"Based on our experience [while hosting the G20 in 2022], we did not take too long to develop the infrastructure when we set up the chargers. The real bottleneck was the manufacturers,” said Rachmat Kaimuddin, a deputy at the Office of the Coordinating Maritime Affairs and Investment Minister, on Friday.
Rachmat emphasized that focusing on incentives and investment schemes is crucial to enticing global EV players to enter the Indonesian market. He stressed that widespread charging stations would not be effective unless a sufficient number of EVs were actually on the roads, which is currently hindered by high prices.
Read also: Indonesia's first EV battery cell factory to begin production in April
Currently, under Industry Ministry Regulation No. 29/2023 and Investment Ministry Regulation No. 6/2023, foreign companies importing completely built-up (CBU) conventional vehicles face a cumulative tax of 76 percent, import duty, luxury goods sales tax (PPnBM) and value-added tax (PPn).
