Indonesia attracted new investments worth a total of Rp 37.1 trillion (US$2.48 billion) from Japanese automakers, Mitsubishi and Toyota through the coordinating minister for Economic Affairs, Airlangga Hartarto recently.
"I believe demand for EVs whether its four-wheels or two-wheels will keep increasing in Indonesia and ASEAN," Hartato said to the Economic Times.
Toyota Motor plans to invest Rp 27.1 trillion in Indonesia in the coming five years to produce electric vehicles (EVs). Hartarto said in a statement that Toyota had invested Rp14 trillion in Indonesia since 2019.
Over the next few years, Toyota is set to produce new types of hybrids so that the Indonesian government may see their commitment to green energy.
"We hope with this additional investment, Indonesia's government understands our seriousness to invest in EVs," said Toyota's vice chairman, Shigeru Hayawaka in the statement.
Mitsubishi CEO Takao Kato also commented that the company will launch a new electric vehicle (EV) soon. More specifically, Mitsubishi plans to produce hybrid EVs and battery EVs in Indonesia to support the government's goal of achieving carbon neutrality by 2060.
The Japanese automaker has invested Rp11.3 trillion (approximately US$754 million) until 4Q21 for all its factories located in Indonesia, according to Hartato. "The target is Mitsubishi Motors Corporation will invest around Rp10 trillion from 2022 to 2025," he said in an official statement on July 26 after meeting Takao Kato in Tokyo.
When discussing export incentives for Mitsubishi's products, Hartarto mentioned that the tax levied by the Indonesian government is about as competitive as any other country, such as Thailand.
In response to Takao Kato's question, "But because there is a difference in the amount of regional taxes, it seems that taxes in Indonesia are higher. This is what we [Indonesia] are studying at the central government," Hartarto added.
Incentives are the topic most frequently highlighted as they are considered a trigger mechanism, especially for either the HEV or BEV development.
List of incentives in Indonesia | |
Fiscal Incentives | Non-fiscal Incentives |
1. Incentives for import duty on the import of BEV 2. Sales tax incentives on luxury goods 3. Incentives for exemption or reduction of central and regional taxes 4. Import duty incentives on the import of machinery, goods, and materials for investment purposes 5. Postponement of import duties for export 6. The Government bears import duty incentives on the importation of raw materials and/or supporting materials used in the production process 7. Incentives for building a charging station 8. Export financing incentives 9. Fiscal incentives for research, development, and technological innovation activities as well as industrial vocational BEV components 10. Parking rates at locations determined by the Regional Government 11. Reduction of the cost of charging electricity at charging station 12. Support for financing the infrastructure and development of charging station 13. Professional competency certifications for human resources of the BEV industry; 14. Product certification and/or technical standards for BEV industry companies and BEV component industries. | 1. Exclusion from restrictions on the use of certain roads 2. Delegation of production rights for technology related to BEV whose patent license has been held by the Central Government and/or Regional Government 3. Fostering security and/ or securing the industrial sector's operational activities to sustain or smooth logistical and/ or production activities for certain industrial companies that are national vital objects |
Source: President regulation number 55, 2019.
Compared to Thailand, Indonesia lacks a comprehensive incentive plan. The Thai government provides extra incentives for EV manufacturing in certain EV areas of focus, even EV battery and charging infrastructure are included.
Thailand BOI Corporate Income Tax Incentives and non-Tax Incentives for Key Parts of EV | ||
Type | No. | Incentives |
Battery | i. | Pack Assembly: 5-year CIT exemption |
ii. | Module Production: 8-year CIT exemption Incentive of 90% import duty reduction for raw and essential materials not available within the country for 2 years | |
iii. | Cell Production: 8-year CIT exemption (no Cap) Incentive of 90% import duty reduction for raw and essential materials not available within the country for 2 years | |
Battery Cooling System | i. | 8-years CIT exemption |
Charging infrastructure | i. ii. iii. iv. v. | A 5-year corporate tax exemption for smaller charging stations A 3-year additional tax benefit for smaller charging stations Subsidies from THB 70.000 (US$1.913) up to THB 150.000 (US$4.100) Reduced excise duty for EVs with a battery capacity exceeding 30kWh for CBU vehicles (CBU stands for "completely built-up" and refers to vehicles that are imported, rather than locally produced or assembled) Excise tax reduction from 8% to 2% for EVs |
The non-Tax Incentives | ||
1. Permit for foreign nationals to enter kingdom to study investment opportunities 2. Permit to bring in skilled workers and experts to work in investment-promoted activities 3. Permission to own land 4. Permit to remit money abroad in foreign currency 5. No local content requirement 6. No export requirements 7. No restriction on foreign shareholder 8. Visa facilitation | ||
Source: Thailand BOI. Data compiled by DIGITIMES Asia, March 2022.
