Indonesia aimed to boost the domestic car production to 1.5 million units by 2020, from the current target 1.2 million per year - Photo by MoF Office

JAKARTA (TheInsiderStories) – Indonesia’ oldest car company, Djawatan Angkoetan Motor Repoeblik Indonesian, or well-known as DAMRI prepared funds around US$150 million to replace 500 diesel buses into electric buses within five years period. The decision taken followed President Joko Widodo planned to sign an electric vehicle regulation in coming weeks.

The company official Dipo Wirawan explained yesterday (07/26), the planned was based on the assumption that the management of electric power sources for battery charging by the state-owned power producer, PT Perusahaan Listrik Negara (PLN) begin along with the enactment of new policies on electric vehicles.

Currently DAMRI has a joint research with the Asian Development Bank (ADB) on the the use of electric buses. Based on the research, there are several factors that can significantly influence the program such as electricity tariffs from PLN and driver’ competency. Given the many other factors, ADB and DAMRI are still refining their studies.

The government vowed that it would provide broad fiscal incentives to the national automotive industry which pay special attention to the development of battery-based electric vehicles and other battery and auto-development industries in the country. Its an effort to drive export, productivity and global competitiveness of the manufacturer.

Finance Minister Sri Mulyani Indrawati said, the fiscal incentives are contained in two new government presidential decree, which in this week will soon be signed by President Joko Widodo. The expanding policy is aim to drive the target of increasing exports by 600 thousand units by 2020, from this year target 250 thousand units.

In addition, its also aimed to boost the domestic car production to 1.5 million units by 2020, from the current target 1.2 million per year.

“We must enlarge the export wing. The Minister of Industry targets an expansion of 250 thousand by 2020 and the production target for 2019 is 1.5 million units, but I will set our export target to rise to 500 thousand units this year and production will increase to 1.5 million next year,” she said at the 2019 Gaikindo Indonesia International Auto Show in Tangerang, West Java.

Specifically, there will be two regulations signed by Widodo. First is the Government Regulation related to Income Tax on Luxury Goods based on PP Number 41 of 2013. Secondly, the Presidential decree on Electric Cars which is under the auspices of several legal bases, such as 1945 Law, Customs, Energy, Traffic, Electricity, Industry, Environmental Protection, and Management Law

Indrawati stressed, in the draft PP for luxury goods tax, the coverage is conventional passenger vehicles, KBH2, HybridEV, HEV Plugs, Flexy Engine, Fuell Cell EV, and Electric Vehicle. While for the Electricity Car regulation the coverage is only one, battery-based electric car.

The government also will change its tax rate based on emissions and fuel use. In addition, for the electric car rule, fiscal incentives are in the form of import duty incentives on the import of Battery-Based Electric Vehicles, sales tax incentives on luxury goods, tax relief or reduction incentives, import duty incentives on the importation of machinery, goods and materials in order capital investment.

The former Director of the World Bank also explained, there were still several policies provided by the government for actors in the automotive industry, including: suspension of import duty in the context of exports, incentives for government-borne import duties on the import of raw materials and/or auxiliary materials used in the production process , incentives for making Electric Provider Station equipment, working capital credit assistance for financing the procurement of battery swaps, export financing incentives, and other fiscal incentives.

“I hope that all of these policies respond to the needs of businesses, so that this will increase the productivity and competitiveness of the automotive industry,” she said.

To support these various policies, the government will immediately boost infrastructure development to create a supporting foundation for the Indonesian economy by building better transportation systems and encouraging the investment and exports by giving special attention and incentives to business actors with good economic treatment.

“For human resources investments, the government will help the process of recruiting resources in the automotive industry, so that they are not only used by domestic industries but also can work in other countries, such as Thailand,” told Indrawati.

In the future, the minister hopes that the automotive industry will become one of the players from five manufacturing industry sectors that have the potential to be developed. More than that, she requested that the automotive industry sector become one of the world’s automotive players.

“With the demographic bonus, it’s important to get the government’s attention because this is the field of the automotive industry,” she added.

Written by Staff Editor, Email: theinsiderstories@gmail.com