President Joko Widodo during his state of the union address to parliament today - Photo: Privacy

JAKARTA (TheInsiderStories) – Indonesian President Joko Widodo wants to become the second largest electric vehicle (EV) production center in Southeast Asia (ASEAN) to enter the global trends. He also wants the country have an electric car industry in Indonesia to reduce dependence on fossil energy.

“We have started to open up space for electric car development but we want more than that, we want to build our own electric car industry,” Widodo said in his official statement to parliament on Friday (08/16).

Days ago, Widodo has officially signed into effect a presidential regulation that will accelerate the development of EV in Indonesia. The regulation had been under discussion for more than a year as the president’s intent to pursue cleaner modes of transportation met with nationalistic resistance and demands for protection of local automakers.

He said the regulation showed a commitment to encourage the automotive industry to start designing and preparing to produce EV in Indonesia as soon as possible.

Nickel, a metal that is a key ingredient in the production of lithium-ion batteries for the latest generation of EV, is in abundance in Indonesia, giving the country comparative advantage. Widodo said the regulation would ensure that Indonesia’s electric car industry exploits this advantage.

“We know 60 percent of electric car components are in the batteries,” he said. “We can later overtake others to build an inexpensive and competitive electric car industry. Because we have the ingredients. So, this country is a strategic place [for businesses] to start designing an affordable and competitive electric car industry.”

Widodo went on to say that the world is currently experiencing a transition to produce environmentally-friendly vehicles. Countries in the blue continent of Europe and the United States have started to produce vehicles that do not produce exhaust emissions for environmental sustainability.

One type of environmentally friendly vehicles that will be prioritized by Widodo is an alternative fuel vehicle or called a ‘flexy’ car. The government is now continuing to examine the use of 30 percent biodiesel mixture (B30) after B20 was officially adopted last year.

“We have to be brave to start from now, we have already made several leaps in progress. We have started with the B20 program, we will enter the B30 diesel mix with 30 percent biodiesel. But we can more than that we can make B100,” Widodo said.

Testing of B30 on Solar fuel itself has begun and is predicted to end on October 2019, even involving a number of brands of diesel-engined cars. The trial is a preparatory step for the implementation of the B30 mandatory in 2020.

Widodo revealed that most electric cars available in the market today were about 40 percent more expensive than fossil-fueled cars. Therefore, he hoped that Indonesia’s ubiquitous resources of materials required for making the batteries would help push prices down, thus creating greater demand for EV.

According to a draft presented by Finance Ministry Sri Mulyani Indrawati recently, the regulation would stipulate fiscal incentives, such as import tariff incentives for battery-based EV and their supporting technology and materials, as well as value-added tax deductions and tax incentives for imported goods related to investments in the EV industry.

The government has asked French’ Renault and Swedish’ Volvo Group to consider building factories or assembly units in Southeast Asia’s largest market for cars, as it eyes production of 750,000 EV by 2030, said Harjanto, director-general of metal, machinery, transportation, and electronics at the industry ministry days ago. While Japan’s Toyota and Germany’s Volkswagen has shown interest in manufacturing EV,  according to Industry Minister Airlangga Hartarto.

The country’s total vehicle production is seen more than doubling to 3 million units during the period, he said.

Widodo has promised tax incentives to draw foreign investment in EV while also making it expensive to own fossil fuel-powered automobiles to save the country about Rp798 trillion (US$56 billion) from reducing dependence and imports of crude oil.

Previously, South Korea’s Hyundai Motor Company affirmed a $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, has met 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’s 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 EV.

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