VinFast Builds Electric Vehicle Factory In Indonesia To Prepare US$1.2 Billion Capital

Illustration (Photo: Kemenperin)

JAKARTA - The Ministry of Industry (Kemenperin) will facilitate the plan of an automotive manufacturer from Vietnam, VinFast, who wants to invest in Indonesia. The total investment will be realized in the amount of 1.2 billion US dollars to produce electric vehicles in Indonesia.

"We really appreciate VinFast's investment plan, because it will support the development of the electric vehicle ecosystem in Indonesia, given the great potential in Indonesia," said Industry Minister Agus Gumiwang Kartasasmita in her official statement, quoted on Sunday, January 14.

Agus said Indonesia is one of the countries that has a conducive business climate. This made VinFast interested in disbursing his funds in Indonesia.

In the early stages of factory construction, VinFast will disburse funds of 200 million US dollars starting in 2024.

Agus said VinFast would collaborate with domestic companies for the production process. In addition, partnering with transportation companies and technology service providers in the context of expansion for electric taxi vehicles.

"VinFast is also interested in making electric buses, they even want to invest in IKN," he added.

In addition, VinFast is also identifying a suitable location to set up a factory in Indonesia. The land requirement is about 240 hectares.

The total factory capacity will reach 50,000 units per year, with a target of absorbing 1.000-3,000 workers. This factory will operate in 2026.

Regarding VinFast's investment plan, the Indonesian government will provide a number of incentives that can be utilized by companies, including for the electric vehicle industry, including tax holidays, tax allowances, import duty incentives, and Luxury Goods Sales Tax (PPnBM) incentives.

In addition, VinFast's electric car with its right steering wheel, including VF 5 and VF 6, will enter the market in Indonesia this year. This is the company's step to test the market with imported CBU, through a 0 percent import duty tax facility and 0 percent luxury goods tax as regulated in the Minister of Investment Regulation (BKPM) No. 6 of 2023.

Furthermore, at the production stage, the company can take advantage of the 0 percent tariff facility for the Completion Knock Down (CKD) or Incompletely Knock Down (IKD) import scheme which is regulated in the Minister of Industry Regulation No. 29 of 2023.

In addition, the 0 percent Luxury Goods Tax facility can also be utilized by VinFast, if it reaches the minimum requirements of local content as mandated by Presidential Regulation No. 79 of 2023.