The policies, a presidential regulation (Perpres) on electric vehicles and government regulation (PP) amendment on the luxury motorized vehicle tax, are inching closer to becoming reality as the President is slated to sign them this week. Both regulations will take effect two years after they have been signed. 

The country’s automotive industry has been stagnating in recent years. The Association of Indonesian Automotive Manufacturers (Gaikindo) has kept its annual automotive sales target at 1.1 million since the start of the year, unchanged from its 2018 target and lower than last year’s actual sales of 1.15 million.

The industry suffered a blow in the first half as sales declined 14 percent from the same period last year.

Car output slowed 4.61 percent year-on-year (yoy) to 314,901 units during the first three months of the year, Statistics Indonesia (BPS) data shows.

This is in line with the growth of manufacturing, which has been declining since the third quarter of 2018 when it registered a 4.35 percent expansion. In the first quarter, the latest data available, the industry grew 3.86 percent annually.

“Of course it will,” said Gaikindo deputy chairman Jongkie D. Sugiarto on Wednesday when asked if the new regulations would hike investment and production in the automotive industry.

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