Indonesia Unveils Major EV Incentives, Tax Breaks to Boost Local Nickel Industry

The Indonesian government is set to implement a significant stimulus package for electric vehicles (EVs) within the next two to three weeks, a move aimed at reducing the nation's reliance on oil imports. This initiative is being spearheaded by President Prabowo Subianto. According to Finance Minister Purbaya Yudhi Sadewa, the proposed stimulus includes subsidies for approximately 500 types of electric motorcycles and a 100% exemption from luxury goods sales tax (PPnBM) for specific electric car models. Additionally, certain electric car categories will receive a 40% incentive. "The government and President Prabowo want to reduce our dependence on oil imports. Therefore, we will continue to push for the use of electric vehicles," stated Purbaya during a presentation at GIIAS, ICE BSD, Tangerang Selatan on Tuesday (4/8/2026). The government is also focused on improving the investment climate for the automotive industry. Purbaya cited Hyundai's entry into Indonesia, which reportedly took only about four months from investment application to groundbreaking, as an example of expedited cross-ministerial coordination for permits. He encouraged global automotive manufacturers, including Japanese companies, to relocate their production bases and supporting industries to Indonesia, promising substantial incentives to make the country a regional automotive manufacturing hub. "We will provide every incentive you need. Bring your production facilities from Thailand to Indonesia and bring your supporting industries too. We will seriously improve the investment climate," he said. Purbaya emphasized the strategic role of the automotive industry, which employs around 1.5 million people and has a production capacity of approximately 2.6 million vehicles annually. Its close ties to steel, electronics, logistics, and financial services mean that increased investment will have a multiplier effect on the national economy. A key aspect of the strategy involves special incentives for EVs equipped with nickel-manganese-cobalt (NMC) batteries. This aims to leverage Indonesia's abundant nickel resources and stimulate the domestic nickel-based EV market. Energy and Mineral Resources Minister Bahlil Lahadalia confirmed that this scheme is under development, noting that lithium iron phosphate (LFP) technology is not a primary focus due to Indonesia's limited domestic raw material availability for LFP batteries. Bahlil highlighted the superior performance of nickel-based batteries, particularly for long-distance travel, believing they will remain popular despite potentially higher prices compared to LFP variants. "For short distances, LFP is usually good, but for long distances, nickel is still more robust," he commented. Previously, in May 2026, the government was reportedly preparing an EV incentive program targeting 100,000 electric cars and 100,000 electric motorcycles for the year. The proposed scheme included a Rp5 million incentive per electric motorcycle and a government-borne value-added tax (PPN DTP) of 40% to 100% for electric cars. This PPN DTP policy is exclusively for pure EVs, excluding hybrids, with the tax reduction varying based on the battery type (nickel vs. non-nickel). Source: Liputan6