The Indonesian government is holding discussions with industry stakeholders and regulators to develop new incentives for electric vehicles (EVs).

According to Minister of Finance Purbaya Yudhi Sadewa, the government is engaging with organisations and industry players, including Association of Indonesian Automotive Industries (GAIKINDO), to assess potential incentive structures for 2026.

"GAIKINDO invited us to attend the car exhibition, but also to discuss, for example, what incentives are needed for electric cars and so on," he said, noting that discussions remain ongoing and no final decisions have been made.

Purbaya also stated that coordination is underway with Minister of Industry Agus Gumiwang Kartasasmita regarding incentives for electric two-wheelers. Agus similarly indicated that the government aims to accelerate the adoption of electric motorcycles.

Agus also relayed a directive from Indonesian President Prabowo Subianto on promoting EV adoption.

"The importance of doing so is increasingly apparent, reducing our dependence on fossil fuels. So, there really is no other choice but to convert to electricity," he said.

The President recently announced that Indonesia plans to begin mass production of electric vehicles, particularly sedans, by 2028.

Policy developments

In September last year, the government announced that financial incentives for imported battery electric vehicles (BEVs) would be discontinued from 2026. In February, a proposal was submitted to the Ministry of Finance to introduce a revised set of EV incentives for 2026, although no updates have been provided on its progress.

The proposal included recommendations to reinstate financial incentives related to the Luxury Goods Sales Tax (PPnBM) and value added tax (VAT). The PPnBM applies to vehicle purchases, with rates determined by factors such as passenger capacity and engine specifications.

While incentives for EVs in 2026 have yet to be confirmed, tax incentives for low-cost green cars (LCGC) will remain in place until 2031. However, tax measures for vehicles outside the low-cost category are still under discussion.