Indonesia Planning Tax Incentives For EV Manufacturers

In an effort to increase its appeal to top manufacturers like Tesla Inc. and BYD Co., Indonesia is rumoured to be planning additional tax incentives, Bloomberg reported. 

According to sources who declined to be identified because the policy has not yet been made public, the cabinet has decided to offer 0% export duty and a value-added tax exemption to electric carmakers who would establish themselves onshore.

It's not clear how long the incentives would be available for or if there would be any additional requirements.

Investors can bring in cars to sell locally, but they must finish building a factory within two years or face penalties that the government is still considering. The cabinet's decision needs to be formalised, and before it is made public, the policy may change.

Raising the stakes in the competition for a piece of the global EV supply chain is President Joko Widodo. Thailand, a regional automotive powerhouse, Vietnam, and the Philippines are competitors of Indonesia.

While top EV manufacturer BYD signed an agreement to explore investment opportunities in May, no actual deal has been announced so far, Indonesia has been in negotiations with Tesla for years to convince the US automaker to establish a local operation there.