Import Import Import Import Exemption Is Considered An Attractiveness For Electric Vehicle Investment

JAKARTA - The government's policy to provide additional incentives in the form of exemption from import duties and Sales Tax on Luxury Goods (PPnBM) for imports of electric vehicles as stated in Presidential Regulation (Perpres) No. 79 of 2023 is considered to be an attraction for investment in the electric vehicle (EV) sector.

Tony Blair Institute (TBI) Indonesia Country Director Shuhaela Haqim said the limited choice of affordable electric vehicle (EV) products in Indonesia is one of the factors that hinders EV adoption rates.

"We need to encourage efforts to present EV options for the community and build a consumer base for EVs in the country. Therefore, we see that 0 percent import duty incentives and 0 percent PPnBM for CBU EV imports that have just been rolled out by the government are investment schemes that are attractive to producers," he said as quoted by ANTARA, Thursday, January 11.

According to Shuhaela, this incentive provides an opportunity for EV manufacturers to be able to build manufacturing facilities in Indonesia while testing their EV products and building EV market share in the country.

He said the implementation of a similar incentive scheme had been carried out by Thailand in 2022 and proved to be an effective "user" to increase sales of electric vehicles and attract investments in global electric car manufacturers.

"The incentive packages that Thailand provides have boosted sales of electric cars from their total car sales from around 3 percent in 2022 to 9 percent in 2023. An extraordinary spike and hope is that this can also be realized in Indonesia," said Shuhaela.

It is known that the government provided additional incentive packages contained in Presidential Regulation (Perpres) No. 79 of 2023 concerning Amendments to Presidential Decree No. 55 of 2019 concerning the Acceleration of the Battery-Based Electric Motor Vehicle Program (KBLBB) is expected to boost Indonesia's electric vehicle production capacity (EV).

The Presidential Regulation regulates the provision of incentives in the form of import duties of 0 percent, PPnBM 0 percent and exemption or reduction of regional taxes for KBLBB, all of which apply to the import of KBLBB in a complete state (Completely Built-Up/CBU) and Completely Knock Down (CKD) with TKDN less than 40 percent.

Through this regulation, EV producers will be able to enjoy imported incentive packages until the end of 2025. Furthermore, producers are required to comply with the provisions of domestic EV production or "production debt" until the end of 2027, in accordance with the provisions of the applicable TKDN.

Additional incentive packages are expected to support the acceleration of EV adoption by presenting more choices of EV product variations at a more affordable price for the Indonesian people.

Previously, the government had launched fiscal and non-fiscal incentives for consumers and producers. One form of incentive is a discount of IDR 7 million for all Indonesians who want to buy a new electric motorcycle that meets 40 percent of the needs of local components.

The implementation of the rules regarding incentives has been stated in one of the derivatives of Presidential Decree 79/2023, namely the Regulation of the Minister of Investment/Head of BKPM Number 6 of 2023 which will take effect as of January 19, 2024.