Indonesia Offers Tax Breaks On EV Imports To Attract Investment

Mitsubishi Motors and China's Neta EV have committed to make investments. China's BYD and Tesla are also being courted by Indonesia.

Companies who have invested in EV plants, plan to increase their EV investments, or are planning to invest would be eligible for the incentives under the new regulation signed on December 8 and released this week.

Under the new regulations, built-up vehicles brought into the nation will no longer be subject to import duties or the luxury goods sales tax, and provincial governments will receive incentives on the taxes they collect.

Prior regulations limited these benefits to automobile imports that are shipped as disassembled units that are put together in the nation in which they are sold. The largest car market in Southeast Asia is in Indonesia.

The investment ministry must approve the amount of vehicles that companies can import, which is contingent upon the plant's development progress and investment size.

Deputy Rachmat Kaimuddin of the Coordinating Ministry of Investment and Maritime Affairs stated that the new decree will assist automakers in expanding their market share in Indonesia through EV imports during a webinar on the country's economic prospects on Wednesday.

The government of Indonesia has set a lofty goal to produce 600,000 electric vehicles by 2030. That is more than a hundred times the quantity that was sold in Indonesia during the first half of 2023.

Several carmakers, such as Hyundai, have made investments in Indonesia, while Mitsubishi Motors and China's Neta EV brand have also committed to make investments. China's BYD and Tesla are also being courted by Indonesia.