Acceleration of the Battery Electric Vehicle (BEV) program
The Government of Indonesia issued Regulation of the President No. 79/ 2023 on the Amendment to Regulation of the President No. 55 of 2019 on the Acceleration of the Battery-Powered, Electric Motor Vehicles (BEV) for Road Transportation Program, which has been in force since December 8, 2023. The new Decree aims to enhance BEV ecosystem in Indonesia through policy relaxation and incentives. Four new amendments covered in this Regulation are the adjusted TKDN fulfillment periods, importation of CBU BEV for the purpose of electrification acceleration, charging infrastructure, and adjusted incentives.
The amended regulation relaxes the TKDN timeline, which companies have now to produce at least 40 percent TKDN requirement by 2026, instead of the previous 2023 deadline. The eligibility criteria for parties looking to import BEV in CBU form has now been expanded. The Amendment has also clarified the various forms of incentives, including import duty, sales tax, and tax-free or tax reduction. The incentive is applicable to companies who have invested in EV manufacturing facilities, are planning to invest, or have increased their EV investments.
In contrast, the previous regulation only granted incentives to imports of knocked-down vehicles, which are delivered in parts and assembled in the country. The number of imports also would depend on the investment size and development progress of the plant and must be approved by the Investment Ministry. Hence, with the new regulations, Indonesia can accelerate the establishment of EV industry and markets to realize its ambitious target of producing 600,000 EVs by 2030. Some foreign companies including Hyundai have invested in Indonesia followed by commitments by China’s Neta EV brand and Mitsubishi Motors. Indonesia is also courting Tesla and China’s BYD.