Indonesia is considering reducing the value-added tax on electric car sales from 11% to 1% to drive up demand and attract investment, said Septian Hario Seto, a senior official with the investment coordinating ministry.
Indonesia has a target of having at least 1.2 million electric motorcycles and 35,000 electric cars in use by 2024.
“We are still doing a benchmark analysis with other countries [on electric vehicles incentives],” he told reporters after speaking at an investment forum on Wednesday.
He also said the government would give a cash incentive of 7 million rupiah ($467.60) for every electric motorcycle sold, until sales reach a certain volume that is still under discussion.
The planned incentives, however, may only be available for electric vehicles (EVs) that are at least 40% locally-made, under Indonesia’s ‘local content rule’.
“The [next step] is that the local content percentage be increased further to 60% and more,” he added.
Separately on Wednesday, senior cabinet minister Luhut Pandjaitan said the regulation laying out incentives for EVs is expected to be issued next week.
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Additionally, the Production Linked Incentive (PLI) scheme for auto industry has been an overall success, attracting proposed investment of Rs 74,850 crore and has been critical in stimulating local production across automotive value chain. To further aid green and sustainable mobility, there has been a sharp focus towards production, utilisation, and export of green hydrogen, facilitated via Green Hydrogen mission with a capital outlay of over Rs 19,700 Cr.