Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan said on Monday that China’s Wuling and South Korea’s Hyundai were planning to build additional manufacturing facilities in Indonesia.

Furthermore, the government was aiming to get new carmakers, such as China-based BYD Auto, to build EV assembly plants in Indonesia, Luhut said.

“As for Tesla, we are still in a nondisclosure agreement, but I can say that there has been significant progress,” Luhut told reporters after a media briefing in Jakarta.

Read also: Indonesia doubles down on EV incentives to hit tipping point

Taufiek Bawazier, the Industry Ministry’s director general of metals, machinery, transportation equipment and electronics industry (ILMATE), said the rollout of government incentives had meant more EV producers were interested in investing in Indonesia.

As of now, three new carmakers are willing to come, he said, declining to disclose their brands for reasons of confidentiality.

“One producer from Europe, and the others from China and Japan,” Taufiek told reporters on Monday after the same press briefing.

New incentive packages

The government has introduced incentives ranging from tax deductions to import duty exemptions covering entire supply chains in the EV ecosystem.

Producers of EVs and key EV components can get tax holidays of up to 20 years depending on the size of the investment. Investors conducting research and development in the downstream EV industry and battery design can get a super tax deduction of up to 300 percent.

The government will exempt from value added tax (VAT) base metals produced by local mining companies for battery production, as well as imported machinery and engines needed in EV manufacturing.

Completely knocked down and incompletely knocked down imports, which refer to the delivery of unassembled EV parts either fully or partially manufactured overseas, will be exempted from duties when brought into the country through free trade agreements.

These incentives apply to industries related to electric four-wheelers, two-wheelers and buses.

Furthermore, the government has cut VAT for electric four-wheelers and buses to 6 percent from the usual 11 percent, or to just 1 percent if they contain at least 40 percent local content (TKDN).

Electric cars are also exempted from luxury tax, whereas non-electric ones are subject to a 15 percent rate.

Read also: Govt earmarks Rp 1.75t for electric two-wheelers 'assistance'

Finance Minister Sri Mulyani Indrawati told reporters at the same media briefing on Monday that the government had earmarked Rp 7 trillion to provide subsidies for electric two-wheelers, with around Rp 1.75 trillion set to be spent this year and the rest in 2024.

The subsidies will cover purchases of around 200,000 electric motorcycles meeting the 40 percent TKDN requirement and 50,000 conversions of conventional motorbikes to EVs this year and three times those numbers in 2024.

“Producers eligible for the subsidy must not raise their prices during the period of the program,” Sri Mulyani told reporters on Monday.

The subsidies are intended for low-income earners, such as beneficiaries of the government’s microcredit program and recipients of low volt-ampere subsidized electricity.