Indonesia is finalizing a new set of incentives in its effort to attract investment from EV companies, a senior minister said, as the country keeps up negotiations with major EV companies like US-based Tesla and China-based BYD. 

The Coordinating Minister of Maritime Affairs and Natural Resources, Mr. Luhut B. Pandjaitan, said the incentives would be benchmarked by those provided by regional rivals Thailand and Vietnam, though he did not give any further specifics. 

"Tomorrow we are going to finalize incentives that we are going to give to any EV investment in Indonesia," Mr. Pandjaitan said, speaking at a nickel industry conference held by CNBC Indonesia on Tuesday, July 25, 2023. 

Indonesia has been aggressively courting EV makers to invest in the archipelago. Due to its rich nickel reserves – the world's biggest – and its strategic geographical location on the Strait of Malacca, Indonesia offers significant advantages for resources for EV battery production as well as market access to the rest of the world. 

However, due to the country’s lack of infrastructure and the subsequent comparatively high logistic costs, EV makers like China's BYD have leaned more towards Thailand, the region's automotive hub, as an investment partner. In September 2022, BYD announced it would set up a project worth $491.49 million in Thailand to start producing 150,000 passenger cars per year in 2024. 

Mr. Pandjaitan said he would have a meeting with BYD executives on Thursday during the Indonesian President Joko “Jokowi” Widodo’s official trip to China this week. As quoted from Jakarta Globe, Mr. Jokowi was also scheduled to visit the BYD’s assembly plant in Chengdu, China.  

"BYD has expressed interest in investing in Indonesia, and on July 27, we will visit Chengdu during President Jokowi’s trip to China," Mr. Pandjaitan said. 

Mr. Pandjaitan added that he was also planning on meeting with Tesla CEO Mr. Elon Musk in California, US, on August 3. This would be his second meeting with Mr. Musk to discuss EV investments in Indonesia. Their first meeting was in April 2022. 

Indonesia has approached Tesla for years, though the EV producer nor the Indonesian authorities has yet to announce any concrete plans. Tesla instead have been in talks with Indian officials for an investment of an EV factory with the capacity to produce about 500,000 units of a $24,000 EV car per year.