Amid ongoing uncertainty surrounding electric vehicle (EV) incentives, Indonesia could face potential job losses as two Japanese automotive component manufacturers operating in East Java are reportedly considering relocating part of their production to Vietnam.

The move, driven by the transition towards EVs and the search for more competitive manufacturing locations, could affect thousands of workers, according to Said Iqbal, Special Presidential Advisor for Employment and Workers Welfare, who also serves as President of the Confederation of Indonesian Trade Unions (KSPI) and Chairman of the Labour Party.

"Their parent companies in Japan plan to relocate production to countries that are considered more productive while diversifying their product lines. They will focus on EVs, and that development is being carried out in Vietnam, not Indonesia," Said told an online press conference.

He stated that the issue reflects broader questions surrounding the country's EV policy framework. Said added that the companies believe EV manufacturing in Indonesia is less competitive, while Vietnam has implemented policies that are more supportive of EV investment.

Said declined to identify the companies but stated that they are automotive component manufacturers located in Pasuruan and Mojokerto, East Java, referring to them only by the initials J and S.

"There are two automotive component companies in Pasuruan and Mojokerto. I cannot disclose their names yet, but thousands of workers could be affected by layoffs," he said.

Said noted that he had tasked the Indonesian Metal Workers Federation (FSPMI), a union affiliated with the KSPI, with opening discussions with management in an effort to persuade the companies Japanese parent organisations not to relocate their operations to Vietnam.

He further stated that the outcome of those discussions would later be conveyed to President Prabowo Subianto, State Secretary Prasetyo Hadi, and Deputy House of Representatives Speaker Sufmi Dasco Ahmad. Said was appointed to the presidential advisory role earlier this month.

"What steps will the government take? This is fundamentally a policy issue, particularly policies related to EVs," he further added.

The reported relocation plans come at a time when Indonesia's EV industry is facing uncertainty over government incentives that have expired. Several measures introduced to support EV adoption in Southeast Asia's largest economy have lapsed, including subsidies for new electric motorcycles, which ended in late 2024, and incentives for electric passenger cars, which expired at the end of 2025. Neither programme has been formally extended.

The government also reversed plans earlier this year to remove certain tax incentives for EVs following industry opposition, adding to uncertainty surrounding the regulatory environment for EV investment.

The government is preparing a new package of EV incentives and aims to implement it in July, although the details are still being finalised as the Finance Ministry recalculates subsidy levels, Deputy Industry Minister Faisol Riza recently stated.

Finance Minister Purbaya Yudhi Sadewa previously stated that the government is considering an IDR 5 million (US$ 280) subsidy for up to 100,000 electric motorcycles. For electric cars, incentives could include government-borne value-added tax exemptions ranging from 40%-100%, depending on battery technology, covering as many as 100,000 vehicles.