TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

Long way to go before Indonesia produces electric vehicles

Local electric vehicle (EV) makers need fiscal incentives and regulatory simplicity in order to strengthen their presence in the world’s fourth most populous country and help the government realize its ambition to establish a strong EV manufacturing industry

Adrian Wail A. (The Jakarta Post)
Jakarta
Thu, October 3, 2019

Share This Article

Change Size

Long way to go before Indonesia produces electric vehicles

L

span>Local electric vehicle (EV) makers need fiscal incentives and regulatory simplicity in order to strengthen their presence in the world’s fourth most populous country and help the government realize its ambition to establish a strong EV manufacturing industry.

Without incentives and business-friendly regulations, the government plan to establish a strong electric vehicle manufacturing industry will be difficult to materialize.

Local EV maker PT Great Asia Link (GRAIN) expert staff member Robert Aritonang said the company would need fiscal incentives from the government to produce its vehicles, citing the high cost of EV components and import tariffs as the main aspects that hampered the local industry.

“I am asking the government to provide EV makers with fiscal incentives, such as an import [tax] waiver, at least for the pilot project, so that we can cut production costs and determine market demand,” said Robert during a discussion between industry players and government representatives in Jakarta on Thursday.

Robert said complicated bureaucratic procedures also hampered business, urging the government to ease procedures in forthcoming ministerial regulations following the issuance of Presidential Regulation No. 55/2019 on EVs.

“It is true that there is a one-door policy, but we are still obliged to report to several entities. On top of that, bureaucratic procedures also pose complications for us,” he told The Jakarta Post.

Robert’s opinion is in line with a World Bank economic assessment conveyed to President Joko “Jokowi” Widodo earlier this month that says a series of nontariff measures have made the importation of capital goods difficult for electric carmakers.

Such measures include preshipment inspection by independent surveyors and import approval or recommendation letters from the Industry Ministry, while capital goods also have to comply with Indonesian National Standards (SNI).

Jokowi signed the long-awaited presidential regulation on EVs last month that stipulates fiscal incentives, such as import tariff incentives for battery-based EVs and their supporting technology and materials, as well as value-added tax deductions and tax incentives for imported goods related to investment in the EV industry.

The regulation also stipulates that local EV makers are obliged to use local content (TKDN) for the production of EVs, in which companies are obliged to use at least 35 percent local content from 2019 to 2021 and 80 percent local components by 2030.

Meanwhile, Indonesian Automotive Institute (IOI) deputy director for technology and engineering Indra Chandra Setiawan told the Post that TKDN should be incentive-based to achieve the government's target, adding that the government should provide fiscal incentives such as lower income tax (PPh) for companies that comply with TKDN requirements.

"Technically, there are many things that we should improve, particularly regarding batteries. We have yet to find cheap batteries that are durable and have a large capacity," he said, adding that the government should encourage research and development activities on batteries.

Indra said local EV makers were struggling to sell their products due to the relatively expensive components and tax, limited driving distance and charge time.

"We need a supply chain to develop [EV] spare parts in the country. However, with uncertain demand there will not be any investment as it could not be justified with the return on investment," said Indra said on Sept. 24. He added that the situation had resulted in the local industry importing most EV components.

Indra added that the country should build a strong local supply chain, such as for engines, electrolyte and power inverters, to provide EV makers with affordable components. "We should build a road map and consistently follow it step by step."

Separately, automotive expert Bebin Djuana said the government should expedite the formulation process on regulations aimed at implementing the plan to boost the EV industry, adding that industry players would not start producing EVs before the government issued regulations.

{

Your Opinion Matters

Share your experiences, suggestions, and any issues you've encountered on The Jakarta Post. We're here to listen.

Enter at least 30 characters
0 / 30

Thank You

Thank you for sharing your thoughts. We appreciate your feedback.