JAKARTA - Executive Director of the Institute for Essential Services Reform (IESR) Fabby Tumiwa assessed that the government's plan to stop electric car incentives in 2026 was inappropriate because the value of the incentives issued by the state was much smaller than the economic burden due to environmental damage from transport emissions.
"The government must realize that the cost of environmental damage and health impacts due to transportation emissions is much more expensive than the rupiah value of the incentives currently provided," said Fabby Tumiwa, Saturday, January 3.
According to him, allowing fossil vehicles to dominate the streets will trigger much more expensive ecological recovery costs for the country.
"This policy of withdrawing incentives shows a short-term perspective that ignores the burden of the future climate crisis," he said.
Fabby explained that if the 10 percent VAT incentive is revoked, the price of electric vehicles will soar and the public's interest in switching is sure to plummet sharply.
Fabby explained that IESR noted that the use of one electric car unit as far as 20,000 km per year was actually able to reduce fuel imports by 1,320 liters.
"Don't let us get caught up in saving fiscal budgets, but instead let the trade balance deficit swell due to the continued dependence on imported fuel," he added.
Apart from environmental issues, the revocation of this incentive threatens investment in the battery industry, which is projected to reach IDR 544 trillion by 2060. Many manufacturers are currently in the middle of the factory construction process and need legal certainty from the government.
Fabby asked that the incentive be extended to maintain the momentum of the energy transition and protect people's rights to cleaner air quality.
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