The two regulations will comprise a presidential regulation (Perpres) on battery electric vehicles and a revision of a government regulation (PP) regarding luxury goods tax, Finance Minister Sri Mulyani Indrawati said during a conference at the 2019 Gaikindo Indonesia International Auto Show (GIIAS) on Wednesday.

"This week, the President will sign two very important policies for the automotive industry," Sri Mulyani said. "Concerns over climate change are important [to the industry]. The world is looking for such policies and our government should thus cater to these concerns."

The Perpres will stipulate a number of fiscal incentives for the EV industry, such as import tariff incentives for battery based EVs and their supporting machinery and materials, VAT deductions and tax incentives for imported goods related to investment in the EV industry.

Meanwhile, the revision of PP 41/2013 on luxury motorized vehicle taxes will change the classification of taxes imposed on certain passenger vehicles based on their emission rates, namely low-cost green cars (LCGC), hybrid EVs, plug-in EVs, flexy engine EVs, fuel cell EVs and fully electrified vehicles. The revised PP will see lowered luxury goods taxes starting at 15 percent of the price of the vehicle, far lower than the existing taxes that average around 40 percent.

With the issuance of the two new policies, Indonesia is expected to pick up its pace and improve its competitiveness both domestically and abroad, Sri Mulyani added.(hen)

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