The Government Transfers the Import Incentive for Electric Cars to National Cars

JAKARTA - The government has ensured that the incentive scheme for imported electric cars will not be extended after it expires on December 31, 2025. Coordinating Minister for Economic Affairs Airlangga Hartarto said that the budget that has been allocated for the incentive will be diverted to support the development of the national car program.

According to Airlangga, this policy was taken as part of a strategy to revive the domestic automotive industry while directing investments to have a long-term impact. So far, electric vehicle incentives have been a government instrument to attract global manufacturers to invest in Indonesia.

"Where do you want to divert the electric car incentive budget? Of course, we have a national car planning (focus on national cars), so that we can actually learn from VinFast," Airlangga told reporters in Subang, West Java, quoted Tuesday, December 16.

The incentives in question include the exemption of import duties on imported electric cars completely built up (CBU) to zero percent, from the normal tariff of 50 percent. This scheme has been in place since February 2024 and has been used by six automotive companies.

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The manufacturers who are listed to participate in the program include BYD Auto Indonesia, VinFast Automobile Indonesia, Geely Motor Indonesia, Era Industri Otomotif (Xpeng), National Assemblers which oversees the brands Aion, Citroen, Maxus, and Volkswagen, as well as Inchape Indomobil Energi Baru with the brand GWM Ora.

As a return for the incentive, the government requires each manufacturer to realize the production of electric cars in the country by meeting the provisions of the Domestic Component Level (TKDN). The number of units produced must be equivalent to the volume of CBU imported.

This production obligation is valid from January 1, 2026 to December 31, 2027. If it is not fulfilled, the government has the right to liquidate the bank guarantee as compensation for the unfulfilled production commitment.

Airlangga emphasized that for manufacturers who have enjoyed various facilities from the government, now is the time to prove their seriousness by building production facilities in Indonesia. He added, VinFast is considered capable of being an example because it carries out investment while building a factory in the country.

"The government has provided various incentives, so they just have to make (establish a factory)," said Airlangga.

"Existing, and VinFast can do both (invest and build a factory). So the others (other electric car manufacturers), who do not have factories but enjoy incentives must participate like VinFast," he explained.