BYD to Volkswagen Production of EVs in RI to Avoid Import Duties

JAKARTA - Deputy for Infrastructure and Transportation Coordination of the Ministry of Coordinating for Infrastructure and Regional Development, Muhammad Rachmat Kaimuddin, said that a number of well-known electric car manufacturers from BYD to Volkswagen will produce electric cars (EV) in Indonesia to avoid import duties.

"If they don't produce in Indonesia in 2026, their import taxes will increase. The options are diverse, they can make their own factories, they can work with domestic assembler manufacturers," said Rachmat as quoted by ANTARA, Thursday, December 18.

Rachmat explained that there were nine brands that had committed to start producing electric cars in Indonesia, namely Geely, BYD, Citroen, Vinfast, GWM, Volkswagen (VW), Xpeng, Maxus, and AION.

This statement is in line with the Minister of Investment and Industrialization/Head of the Investment Coordinating Board (BKPM) Rosan Roeslani who said that there were seven electric vehicle manufacturers building production facilities.

The seven manufacturers are VinFast, Volkswagen (VW), BYD, Citroen, AION, Maxus, and Geely.

The seven electric vehicle manufacturers have also made investments totaling Rp15.4 trillion to produce 281 thousand units per year.

Meanwhile, GWM (Great Wall Motor) already has an assembly facility in Indonesia located in Wanaherang, Bogor, and Xpeng already has an assembly plant in Indonesia, specifically in Purwakarta, West Java.

Rachmat also revealed that BYD has built its assembly plant in Indonesia.

Thus, Rachmat said that the nine brands would not be affected by the obligation to pay import duties, as long as their cars were no longer imported in their entirety (CBU/completely build up), but were assembled in the country (CKD/completely knocked down).

"So there is no reason for them (to raise prices)," said Rachmat.

As previously reported, the Ministry of Industry (Kemenperin) stated that it would not extend incentives for battery electric vehicles (battery electric vehicles/BEV) sold in the domestic market with the Completely Built-Up (CBU) import scheme in 2026.

The government provides incentives for the import of CBU electric cars until the end of December 2025 in the form of import duties and PPnBM and PPN exemptions, with the stipulation that the beneficiary companies of these incentives must carry out domestic production 1:1 of the number of CBU vehicles entering the domestic market.

Starting from January 1, 2026 to December 31, 2027, manufacturers are required to produce electric cars in Indonesia with the equivalent amount of CBU import quotas.

This production must comply with the TKDN rules that have been set.