The Indonesian government, through the Ministry of Investment and Downstream and the Investment Coordinating Board (BKPM), has officially expanded incentives for imported Battery Electric Vehicles (BEVs) entering the country.

As outlined in the Regulation of the Minister of Investment and Downstream or the Head of BKPM Number 1 of 2024, these vehicles are now exempt from the Luxury Goods Sales Tax (PPnBM), following the previous exemption from import duties.

However, certain conditions must be met to qualify for these incentives, including the requirement that companies commit to domestic assembly, ensuring compliance with the domestic component level (TKDN) set in the industrial roadmap.

Furthermore, importing countries must have an international agreement with Indonesia, regardless of the type, such as the ASEAN-China Free Trade Agreement (ACFTA), the Indonesia-Japan Economic Partnership Agreement (IJEPA), and the Indonesia-Korea Comprehensive Economic Partnership Agreement (IK-CEPA).

This policy provides significant benefits to Chinese electric vehicle manufacturers. However, Honda has expressed support for the new regulations regarding the expansion of incentives introduced by the government.

"Honda believes that this policy is being implemented to increase consumer interest in electric cars while also supporting national initiatives for a more sustainable future," said Yusak Billy, Sales & Marketing and After Sales Director of Honda Prospect Motor (HPM), on November 19th, 2024.

Additionally, Honda has noted that the policy could encourage investment and the development of the domestic industry.

"We understand that incentives are being provided to manufacturers committed to building electric vehicle production facilities in Indonesia. Therefore, this policy can also stimulate investment and the growth of the domestic automotive industry," Billy further added.