Electric cars assembled overseas could meet Indonesia's 60% local-content requirement if they use batteries manufactured entirely in the country, a senior Industry Ministry official said, recently.

Setia Diarta, the ministry's director general for metal, machinery, transportation equipment and electronics industries, said government simulations indicated that locally manufactured batteries could contribute sufficient domestic value to meet the threshold, even if the vehicles were assembled abroad.

"Based on our simulations, when manufacturers use batteries produced in Indonesia, the 60% domestic-content requirement can actually be achieved. This means manufacturers could meet the requirement regardless of whether they have a vehicle assembly plant in Indonesia," Setia said in Jakarta.

He cited the hypothetical example of an electric car manufacturer that continues to assemble vehicles overseas while using batteries manufactured in Indonesia.

The findings indicate that manufacturers could potentially meet Indonesia's localisation requirements through their supply chains without relocating vehicle assembly operations to the country.

Setia said the development of Indonesia's domestic battery industry was creating opportunities for electric vehicle manufacturers to increase the local content of their products. He noted that compliance with domestic-content requirements depends on both the location of vehicle assembly and the origin and value of their components.

Local-content requirement to rise in 2027

Indonesia plans to increase the minimum domestic-content requirement for electric vehicles to 60% in 2027, up from the current 40%, under Presidential Regulation No. 79 of 2023.

The requirement is scheduled to increase further to 80% from 2030 as the government seeks to expand domestic manufacturing and the electric vehicle supply chain. The domestic-content requirement, known locally as Tingkat Komponen Dalam Negeri (TKDN), measures the proportion of a product's value attributable to domestic production under the government's applicable calculation rules.

Setia's remarks indicate that domestically produced batteries could influence whether electric vehicle models qualify under the higher threshold. However, actual compliance would depend on the applicable calculation methodology and certification process for each vehicle model.

Previously, Industry Ministry official Patia Monangdo, who heads the ministry's battery electric vehicle industry working team, said the average domestic-content level for electric cars in Indonesia was approximately 45%-47%.