Minister of Finance Purbaya Yudhi Sadewa said the government is finalizing a new tax incentive package for electric vehicles (EVs). He noted that President Prabowo Subianto is scheduled to announce the stimulus package within two to three weeks.
“The President will launch another stimulus for EVs, targeting around 500,000 electric motorcycles and electric cars,” Purbaya stated during the Gaikindo Indonesia International Auto Show (GIIAS) 2026 in Tangerang, Banten (4/8/2026).
The government plans to offer diverse fiscal relief, including up to 100% luxury-goods sales tax (pajak penjualan atas barang mewah/PPnBM) exemptions and a government-borne value-added tax (VAT) incentive of 40% for qualifying vehicles.
Nevertheless, Purbaya indicated that the incentives will likely apply exclusively to battery electric vehicles (BEVs). Hybrid vehicles and plug-in hybrid electric vehicles (PHEVs) are not expected to qualify for the scheme.
“From what I have heard, the plan covers pure EVs only. There is also a slight distinction between nickel-based and lithium-based batteries,” Purbaya added.
He reiterated that the full details will remain subject to the President’s official announcement. He also said that the government is considering differences between nickel-based and lithium-based battery technology in designing the policy.
The government’s push for EV development is anchored in the 2027 Macroeconomic Framework and Fiscal Policy Principles (Kerangka Ekonomi Makro dan Pokok-Pokok Kebijakan Fiskal/KEM-PPKF), which designates the national automotive sector as a Priority National Work Program supporting the downstreaming and industrialization agenda.
Earlier, Minister of Industry Agus Gumiwang Kartasasmita noted that the government would prioritize incentives for national electric car brands as part of its strategy to fortify the domestic automotive industry.
However, the government has yet to clarify the scope of the policy. It remains unclear whether EV manufacturers already operating in Indonesia will qualify for similar incentives.
Moreover, the government has also yet to formally define the term “national car brand. It is uncertain whether the term refers strictly to Indonesia-owned companies or includes vehicles manufactured locally with a high local content level (tingkat komponen dalam negeri/TKDN).
Further clarification is therefore still needed on eligible recipients, including whether foreign brands with manufacturing facilities in Indonesia may qualify, as well as on the timetable for the rollout of the new policy.
Driving Automotive Investment
Minister of Finance Purbaya Yudhi Sadewa. (Ministry of Finance)
Purbaya also urged Toyota to consider relocating its vehicle production hub from Thailand to Indonesia. He believed such a move could solidify Indonesia’s position as an automotive manufacturing center while expanding the domestic industrial supply chain.
“We will support Toyota, move your primary manufacturing operations from Thailand to Indonesia, and we will offer all the incentives you want,” Purbaya stated.
He also encouraged Toyota to bring along its supporting industries, since many inputs, such as steel, electronics, and chemicals, still rely heavily on imports. According to Purbaya, developing these supporting industries domestically would strengthen the country’s automotive sector competitiveness while reducing its dependence on overseas supplies.
“So, if you can bring your supporting industries here, I will provide sufficient incentives, or even more,” he said.
He added that the automotive industry currently plays a pivotal role in the national economy, employing around 1.5 million people and producing approximately 2.5 million vehicles annually. The government, therefore, intends to create a more appealing investment environment and provide stronger support for global automakers seeking to expand or relocate production to Indonesia.
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