The Industry Ministry is targeting to produce 600,000 units of electric cars and 2.45 million units of battery-powered motorcycles in 2030 - Photo by Astra International Office

JAKARTA (TheInsiderStories) – The Industry Ministry is targeting to produce 600,000 units of electric cars and 2.45 million units of battery-powered motorcycles in 2030, said the minister in this week. The production target its expecting be able to reduce CO2 emissions from cars by 2.7 million tones and motorcycles by 1.1 million tones.

According to industry minister, Agus Gumiwang Kartasasmita, three local companies have built facilities to produce battery-powered electric vehicles, with a combined production capacity of 1,480 units per year. To push the production, the government is providing fiscal and non-fiscal incentives to consumers as well as manufacturers, he noted.

While, the incentives for consumers including zero percent luxury tax, a 10-percent cap on regional tax, zero percent down payment, low interest, electricity connection discount, special police number, informed by him. And, for the manufacturers get tax holiday, mini tax holiday, tax allowance, import duty exemption, and super tax deduction for research, development, and demonstration.

Kartasasmita revealed, the automotive industry is one of the key sectors contributing significantly to the national economy. Right now, more than 24 wheeled vehicle manufacturers are operating in Indonesia. Until February, the production and wholesale of four or more wheeled vehicles reached 152,000 units and 102,000 units, respectively.

Recently, the ministry of finance considered to give tax holiday in 10 years period to the new investors, especially in the electric vehicle (EV) sectors, the government official told the lawmakers on Monday. The stimulus is applies to investor who want to build an electric car factory in Indonesia with a minimum investment value of Rp5 trillion (US$347.22 million).

The new policy announced by the director general for tax at the ministry, Suryo Utomo, in a hearing with the Indonesian Parliament, on Monday (03/15). He said, for full battery electric cars, the luxurious tax remains zero percent and for the hybrid cars are proposed to have a tax rate of 5 percent.

While, head of the fiscal policy agency, Febrio Kacaribu, explained that these incentives is given by the government to boost the sales and production of electric cars in the country. He explained, that other countries that provide incentives to boost electric car sales are China, Japan, England, and Germany.

Earlier, the Financial Service Authority (FSA) also plans to give an incentives for the purchasing and credit distributions of EV in Indonesia. The agency provided the stimuluses in the form of funds to debtors that have EV plant or developing upstream industries, such as batteries, charging station industries, and component industries that can categorized as fulfilling the provisions for the implementation of sustainable finance.

The provision of fund categorized as a government program that exempted from the maximum credit limit if guaranteed by state-owned and local government or insurance financial institutions. The policies inline with the FSA regulation Number 38 Year 2019, concerning the Legal Lending Limit and Large Funds Provision.

In 2019, President Joko Widodo has signed presidential decree on the EV, to prompt investors immediately start the industry.The decree contained a series of incentives such as reduction in import tariffs for machinery and materials and lower luxury taxes for buyers. The regulation had been under discussion for more than a year, as the president’ intent to pursue cleaner modes of transportation met with nationalistic resistance and demands for protection of local automakers.

“We knew that 60 percent of electric vehicle’ essential element is in the battery. We have all of the minerals, like manganese, cobalt and so on to produce the battery,” said the head of state.

Indonesia aims to become an EV hub for Asia and beyond with a target to start the production in 2022 and share reached 20 percent of total car production by 2025. The developing of the EV industry may take longer time than two or three years as there are many factors, including the market, that need to be considered as prices of electric cars are averagely 40 percent more expensive than regular cars, he said.

He, however, was optimistic that the price of electric vehicles can be reduced to an affordable level as Indonesia has the essential minerals to produce thebattery. Proposing several policies to support the operation of EV, the president said that the option to provide subsidy for electric vehicles is considerable, coupled with several incentives in organizing their administration documents.

The government is targeting to export 1 million cars by 2025 from this year target 340,000 units, said Minister of Industry Airlangga Hartarto days ago. Therefore, he adds, the government is determined to create a conducive business climate through harmonization and synchronization of regulations in the automotive sector.

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