Three global car manufacturers have committed to establishing automotive factories in Indonesia, with a primary focus on producing electric vehicles (EVs).

During a press conference on the economic policy package in Jakarta on 16th December, 2024, Industry Minister Agus Gumiwang Kartasasmita identified Citroen, BYD, and Aion as the companies involved.

"These three companies will benefit from zero import duties and a 15 percent PPnBM DTP," he stated, referring to the luxury goods sales tax borne by the government.

Kartasasmita explained that providing incentives for the French automobile manufacturer and the two Chinese automotive producers is part of the government's strategy to showcase Indonesia's competitive regulatory environment.

"These regulations include incentives and stimulus," Kartasasmita remarked.

He emphasised that the incentives align with the government's objective of establishing Indonesia as a hub for battery electric vehicle (BEV) production in Southeast Asia.

Starting form 1st January 2025, the government will also offer an incentive to cover 3 percent of the luxury tax burden for hybrid vehicles.

Currently, hybrid cars are subject to a luxury goods sales tax (PPnBM) ranging from 6% to 12%. In contrast, BEVs benefit from various incentives, including a zero PPnBM rate.

The government is also offering a 10% government-borne value-added tax (VAT) for electric cars that meet a minimum domestic component level (TKDN) of 40%.

"Here, we can see that the government is paying great attention to the manufacturing sector by providing incentives and stimulus for the automotive sector," Kartasasmita emphasised.