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More Support from the Government for Battery Electric Vehicle Industry in Indonesia

President Jokowi issued PR 55/2019 on the Acceleration of Battery Electric Vehicle Programs for Road Transportation on August 18, 2019 in Indonesia to encourage more investors who show interest in investing in Indonesia.

With the concern over climate change, and an intention to strengthen the local economy and cut down reliance on oil import, PR 55/2019 lays out measures to accelerate the adoption of several battery electric vehicle (BEV) programs in Indonesia.

There are five major directives to speed up the BEV programs in Indonesia:

  • Advancement of the local BEV industry development
  • Charging stations and regulations of BEV electricity tariffs
  • BEV Incentives
  • Environmental protection
  • BEV technical requirements

 

In this post, you will read more about the support from the Indonesian government with regard to the adoption of BEV programs in the country.

Investing in Indonesia: BEV Industry

investing in electric vehicle in indonesia

Advancement of the Local BEV Industry Development

BEV or BEV component firms that wish to be involved in the local BEV Industry have to possess relevant business licenses to build facilities and manufacture the BEV components.

The construction of facilities can be done by the companies themselves or companies can seek partnership with another industrial company.

PR 55/2019 also intends to improve government and private sector’s partnerships in BEV technology’s innovation, research and development.

This regulation further sets the minimum local content requirement to be 35% or 40% in 2019, depending on the BEV type.

However, it may be increased to 80% between 2026 and 2030.

For companies which do not have the capacity to produce the BEV components in Indonesia, they can import the components based on Completely Knocked Down or Incompletely Knocked Down.

The distribution of fossil-fuel vehicles will be regulated by the Indonesian government as well.

Charging Stations and Regulations on BEV Electricity Tariffs

Charging stations of BEV must be provided by energy-related, state-owned companies. The provision will first be done by the state electricity provider PT PLN. It can then partner with a state-owned business entity. A company with the electricity supply business license is the one permitted to carry out the electricity sale of charging stations.

BEV Incentives

In an effort to accelerate the BEV industry, the Indonesian government will offer various incentives to companies in fiscal and non-fiscal forms. Examples of fiscal incentives are:

  • Vehicle charging discounts
  • Tax and import tax relief
  • BEV research financial support
  • BEV facilities construction financial support
  • Resources and certifications related to BEV industry

 

Examples of non-fiscal incentives are listed below:

  • No restrictions on the use of specific roads
  • Manufacturing rights of technologies with patent owned by the government
  • Security and safety maintenance of BEV industry areas

Environmental Protection

PR 55/2019 states that all BEV’s battery waste is required to be properly managed and recycled by a licensed waste management company. BEV companies that have adequately handled and managed their BEV waste will receive a token of appreciation from the Minister of Environment and Forestry.

BEV Technical Requirements

All BEVs, regardless whether they are imported, or manufactured/assembled in Indonesia, must go through Indonesian registration and testing processes. They have to be in compliance with technical and road-worthiness requirements, and criteria under related customs registration number. Relevant licensed units will carry out periodical testing as well. BEV’s type testing allows the authority to classify a BEV under the correct category.

How Cekindo can Assist You in Investing in Indonesia

Cekindo has in depth knowledge in business setup and legal compliance in Indonesia when it comes to investing in Indonesia. These are always the complex areas that entrepreneurs find challenging but our experts at Cekindo are happy to assist.

We keep you updated with any regulatory changes and advise you on how the BEV programs will be implemented, along with possible opportunities and legal restrictions that may be included in the future.

Let us help you unleash your inner entrepreneur. Discuss your plans with us. Start by filling in the form below.