Image source: ekon.go.id

Source: Coordinating Ministry for Economic Affairs

Link to original article HERE

As the largest motor vehicle market in ASEAN, Indonesia’s automotive industry landscape has the potential to drive the country’s national economic growth far into the future. These growth drivers include the industry’s high absorption of labor, its use of domestic components, its high investment potential, as well as the reduction of import dependencies of the domestic automotive sector. 

Various achievements – such as the increase in factory wholesales to new car dealers in June 2022 of 79.1 thousand units or an 8.87% increase year-on-year (YoY) – also strengthens the promising prospects of the automotive industry. In addition, the transportation industry also experienced significant growth in Q2-2022, reaching 7.35% (YoY) with a 1.36% contribution to the National GDP. Seeing these various potentials and achievements, the government continues its efforts to strengthen the automotive industry through various policies. 

“Economic growth in the second quarter of this year reached 5.44%, on account of the contribution of the automotive sector. Towards that, the government contributed greatly to sales of automotive, one of which was through the relaxation of Sales Tax for Luxury Goods (PPnBM) in 2021 of as much as Rp 4.63 trillion," said Coordinating Minister of Economic Affairs Airlangga Hartarto in his keynote speech during the opening of the 29th Gaikindo Indonesia International Auto Show (GIIAS) at the Indonesia Convention Exhibition in BSD City, Tangerang, on Thursday (11/08). 

Furthermore, Coordinating Minister Hartarto emphasized that in order to encourage consumption, as well as to increase productivity within the automotive industry, the government would maintain the current Government-Borne Sales Tax on Luxury Goods (PPnBM-DTP) for motorized vehicles policy. The policy, which completely slashes the sales tax for luxury vehicles, was applicable for the purchase of 4-wheeled Low-Cost Green Cars (LCGC) within the less-than-Rp 200 million on-the-road sale price segment. The policy, which was implemented in the first quarter of 2022, would remain applicable until the fourth quarter of 2022 with a proportional reduction in the PPnBM rate. 

Additionally, in regards to the significant opportunities posed by the Electric Vehicles (EV) segment, as well as in support of the Conference of Parties on Climate Change (COP21), the government has issued Presidential Regulation no. 55/2019 on the Acceleration of Battery Electric Vehicles (BEV) Program for Road Transportation. The government has further accelerated the development of new and renewable energy infrastructure, as well as the development of the EV/BEV industrial ecosystem. 

To support the development of the EV/BEV segment, the government has also established policies to regulate the implementation of PPnBM tariffs based on the motorized vehicle’s level of carbon emissions.  

In addition to these various policies, the government further encourages the State Electricity Company (PT PLN) to commit to adding more Public Electric Vehicle Charging Stations (SPKLU) as well as to provide special price incentives and tariff discounts to facilitate at-home charging in order to promote the utilization and the sales of EVs and BEVs. 

Coordinating Minister Hartarto also said that the use of EVs as official transportation for delegations at the G20 summit in Bali during Indonesia’s presidency also proves the country’s commitment to becoming a leader by example on issues of the energy transition, environment, and climate change. Under these various policies, Coordinating Minister Hartarto hoped that the utilization of EVs would increase among the public and further strengthen the domestic automotive industry. 

"With these facilities, the government hopes that EVs can be sold domestically at competitive prices and encourage EV production in Indonesia," he said. 

This year's GIIAS was also attended by Members of the Indonesian Parliament, the Minister of Industry, the United Arab Emirates Ambassador to Indonesia, the Deputy Ambassador of Japan to Indonesia, the Deputy Ambassador of South Korea to Indonesia, the Secretary of the Coordinating Ministry of Economic Affairs, Tangerang Regent, the Expert Staff of the Coordinating Ministry of Economic Affairs, the Expert Staff of the Ministry of Industry, the Chairperson of Gaikindo, as well as the Chairperson of the 2022 GIIAS Exhibition Organizer.