Indonesia is reportedly planning incentives for electric-car manufacturers, luring investment from Toyota Motors and SoftBank Group.
Indonesia said Toyota, which has the biggest market share in the domestic car market, would invest US$2 billion in the archipelago alongside US$880 million from Hyundai, to develop electric vehicles (EVs) and hybrids over the next few years.
Toyota said it planned to build hybrid vehicle plants in Indonesia.
The proposed government measures are aimed at accelerating the adoption of electric cars by Indonesian drivers and building an export base. Lower taxes for carmakers and buyers and other benefits like special parking spaces and dedicated lanes, are being proposed. The measures now require presidential approval.
The draft regulation includes incentives for EV manufacturers, infrastructure providers, transport companies and EV buyers.
Buyers may get benefits such as lower luxury taxes on their EVs, lower vehicle tax and subsidised fees at charging stations, the draft policy said.
Indonesia is competing with Singapore and Thailand to become an EV hub and cut the archipelago’s reliance on imported oil. Asean’s largest economy wants EVs to constitute a quarter of its car production by 2030.
Japan’s Softbank Group said this week that it would invest US$2 billion in Indonesia through the ride-hailing app Grab over the next five years and planned to explore EV investment opportunities.
The bank is also studying opportunities to invest in battery production and charging systems in Indonesia, its CEO Masayoshi Son has said.
“This regulation is the largest overhaul of Indonesian automotive industry and it is an ambitious, as well as a brave move, by the government,” said Jeffrosenberg Tan, the investment chief at PT Sinarmas Sekuritas. “We hope this will lead to huge investment in EV infrastructure and will be followed through by the development of the supply chain ecosystem.”
President Joko Widodo said he would sign the decree. “We can go ahead and prepare the infrastructure to support electric vehicles,” the newly re-elected president said.
The reforms are designed to change vehicle tax so they would be levied based on fuel economy and emissions instead of body type and engine size, in a move designed to favour electric vehicles.
The changes say they would require carmakers to gradually increase the amount of domestically produced parts to 80 per cent by 2029 and by 2026 for motorcycle producers.
Infrastructure for electric vehicles is costly and might prove obsolete if battery technology continues to improve. Picture credit: Asean Economist