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Seneca ESG
- August 17, 2023
Indonesia is gearing up to introduce additional tax incentives aimed at attracting global investments in the electric vehicle (EV) industry, as reported by Bloomberg on August 11. According to sources familiar with the matter, the cabinet has approved the plan to exempt EV manufacturers who establish factories within the country from export duties and value-added tax. Additionally, prospective investors importing vehicles for domestic sales will also qualify for these incentive policies, contingent upon completing factory construction within two years to avoid penalties. Further details, including the duration of the incentive program and any potential additional provisions, have not yet been disclosed.
These measures represent Indonesia’s latest endeavors to solidify its position as a significant player in the global EV industry, as it competes with automotive powerhouses in the region like Thailand and Vietnam. Being the world’s largest nickel miner, Indonesia aims to attract foreign investments to its domestic nickel processing sector, thereby contributing to the production of batteries for EV manufacturers. In May, Chinese EV maker BYD signed an agreement with Indonesia to explore EV opportunities within the country. This followed BYD’s commencement of EV factory construction in Thailand a couple of months earlier. Moreover, the Indonesian government has recently announced that Tesla will invest in constructing battery material facilities within Indonesia, with specific plans set to be announced in the coming months.
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