February 21, 2024

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Indonesia strengthens electric vehicle programme

Indonesia plans to roll out new regulations that offer tax breaks for hybrid EVs, in the latest effort to promote the development of electric vehicles in the country. In a meeting with Parliament, Indonesian Finance Minister Sri Mulyani said that investors who build electric cars in Indonesia feel that the current framework is unfair as there is no difference in the tax rates between hybrid and fully electric cars.

While battery-powered EVs continue to be exempted from the luxury tax, the plug-in hybrid EV will see an increase to 5% from 0%. Full and mild hybrid types will be taxed at a rate of 6% to 12%, from a previous range of 2% to 12%. Also, the government will provide tax holiday incentives for up to 10 years if EV manufacturers make at least an IDR 5 trillion (USD 346.2 million) investment in the country.

The new tax scheme reflects the government’s efforts in boosting investment for battery-powered EVs, said researchers from a tax consulting firm. More investment will make Indonesia a centre of manufacturing and it will have a multiplier effect on the economy, with the creation of employment, the emergence of new industries in the EV ecosystem, and expansion of the tax base. It also encourages adoption among consumers, nudging them from hybrids to EVs.

President Joko Widodo has expressed his interest in making Indonesia a top player in the global electric car market, especially given that the country is the world’s largest producer of nickel, an essential component to produce lithium-ion (Li-ion) batteries that power electric vehicles.  Indonesia aims to be a regional EV hub in 2030 and it has been rolling out various initiatives to boost its production in the country.

Tech companies have also expressed their commitment to the initiative. An international ride-hailing giant put over 5,000 electric cars, motorcycles, bicycles, and scooters across Indonesia. Meanwhile, another tech unicorn is planning to test electric motorcycles this year and is working with the state-owned gas and oil company for the commercial pilot in Greater Jakarta.

However, it won’t be easy to make consumers switch on a large scale due to its high price, said the association of Indonesian automotive industries. Most consumers are buying cars at prices between IDR 150 million and IDR 250 million (USD 10,386 to USD 17,310), while electric cars are currently selling for about IDR 500 million (USD 34,620). According to the Association, there is a huge potential for electric cars, but prices must be lowered significantly so they will be more affordable for the wider communities.

Another challenge is the supporting infrastructure like charging stations. The state electricity company PLN currently only runs 37 stations across the country, although it targets to have 2,400 by 2025. Addressing these two major problems will get consumers more interested.

Accordingly, as reported by OpenGov Asia, to enhance the convenience and experience of electric vehicle users as well as to encourage their wider adoption in the country, Perusahaan Listrik Negara (PLN) added 4 General Electric Vehicle Charger points (Stasiun Pengisian Kendaraan Listrik Umum – (SPKLU). An electric energy charging station (SPKLU) is an infrastructure that facilitates the charging of electric vehicles, including electric cars, electric motorbikes, and the like.

PLN has collaborated with Jasa Marga to add these stations on the Surabaya – Jakarta toll road. With the launch of the 4 new SPKLUs on the Trans Java toll road, it will make it easier for people to travel long distances using electric cars.

These latest SPKLU additions are part of PLN’s commitment to supporting the implementation of Presidential Decree No. 55 of 2019 concerning the Acceleration of the Battery-Based Electric Motor Vehicle Program for Road Transportation.

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