Electric Car - Photo by: Ministry of Industry Office

JAKARTA (TheInsiderStories) – Indonesian President Joko Widodo has signed presidential decree on the electric vehicle (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 confirmation was conveyed after he inaugurate the new ASEAN Secretariat building in Jakarta on Thursday (08/08). 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 vehicles’ essential element is in the battery. We have all of the minerals, like manganese, cobalt and so on to produce the battery. With business strategies we can arrange and initiate the electric car industry that produces highly competitive and affordable products as we have the materials here,” the president told media.

Indonesia aims to become an EV hub for Asia and beyond with a target to start the production in 2022 and share reach 20 percent of total car production by 2025. Some big foreign car maker like Japan’ Toyota Motor Corp., to invest $2 billion and South Korea’ Hyundai Motor would invest and $880 million in the country to develop EVs over the next few years.

Developing the electric vehicle 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 the battery.

Proposing several policies to support the operation of electric vehicles, the president said that the option to provide subsidy for electric vehicles is considerable, coupled with several incentives in organizing their administration documents.

“Such policies can initially be applied in Jakarta, particularly in public transport vehicles like buses, minibus, and taxis,” the president said.

Indonesia is now the largest car market in Southeast Asia with 1.15 million cars sold in the country last year. 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.

Last month, South Korea’s Hyundai Motor Company affirmed a US$2.8 billion investment in the development of electric vehicles in West Java, as the company seeks to make Indonesia its key export hub. Hyundai aims to start operations in 2022.

Masayoshi Son, the founder of Japanese technology investment giant Softbank, last week met with President Widodo and pledged at least $2 billion to support online-based mobility solutions and the development of electric vehicles in Indonesia.

Indonesia does not currently produce electric vehicles on an industrial scale. The Blue Bird Group, the country’ largest taxi operator, resorted to importing Tesla and BYD cars from China to establish its first fleet of electric vehicles.

While, Indonesia’ oldest car company, Djawatan Angkoetan Motor Repoeblik Indonesian, or well-known as DAMRI has prepared funds around $150 million to replace 500 diesel buses into electric buses within five years period.

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 begins along with the enactment of new policies on electric vehicles.

Written by Lexy Nantu, Email: lexy@theinisderstories.com