Electric motorcycle subsidies in Indonesia will take effect on March 20 while electric cars will be announced further on April 1, valid for 2023-2024.
Heaptalk, Jakarta — The Indonesian government has budgeted a total of Rp7 trillion or worth US$456 million (US$1 equals Rp15,342) in financial assistance to subsidize the purchase of electric motorcycles as a form of support to accelerate the development of the battery-based electric motorized vehicle industry ecosystem.
Minister of Finance Sri Mulyani conveyed a government subsidy of Rp7 million (US$456) per unit allocates for 1 million units of new electric motorcycles and convertible electric motorcycles. To be implemented in 2023-2024, the provision of government assistance will be managed by two agencies, namely the Ministry of Industry for new electric motorcycles and the Ministry of Energy and Mineral Resources for convertible electric motorcycles.
In more detail, the government will distribute purchase subsidies for 200,000 new electric motorcycles and 50,000 convertible electric motorcycles in 2023 with a total budget of Rp1.75 trillion (around US$114 million). In 2024, the government will deliver subsidies to 600,000 new electric motorcycles and 150,000 convertible electric motorcycles with a total budget of Rp5.25 trillion (around US$342 million).
“What has been (done) so far is the fiscal policy and fiscal incentives given to build the electric car and motorcycle industry. Now, we are providing additional government assistance for new and convertible electric motorcycles,” said Sri Mulyani during a press conference in Jakarta (03/20).
Further, Sri Mulyani detailed that those entitled to receive the new electric motorcycle subsidies include MSMEs receiving people’s business credit assistance (KUR), recipients of micro business productive assistance (BPUM), recipients of wage subsidy assistance (BSU), and recipients of 450-900 VA electricity subsidies. Meanwhile, for convertible electric motorcycle subsidies, there are no specific requirements of the recipients.
Regarding the requirements for motorcycle products, Sri Mulyani said, “The requirement that must be met by motorcycles is that they meet Indonesia’s domestic component level (TKDN) of at least 40%. Electric motor products that receive assistance must be given conditions not to increase their selling price during the period of government assistance.”
Provision of tax incentives, certification for producer and service center providers
In addition to the electric motorcycle subsidies, several tax incentives will also be provided by the government, one of which is a value-added tax incentive in 2023, which aims to increase investment attractiveness in the battery-based electric motorized vehicle ecosystem.
Electric cars and buses with a domestic component level above 40% will obtain a 10% value-added tax incentive, making the tax paid only 1%. Electric buses with a 20-40% domestic component level will receive a 5% value-added tax incentive, leaving 6% of the amount to be paid. These incentives are valid as of March 20, 2023, for electric motorcycles and April 1, 2023, for electric cars and buses.
Meanwhile, Coordinating Minister for Maritime Affairs Luhut B. Pandjaitan said that with this mass adoption along with various other policies, the Indonesian transportation industry is expected to transform into a greener industry. Later on, the developed industry will strengthen Indonesia’s position in the value chain for mineral resources, batteries, and electric vehicles (EVs).
“Anyone who wants to produce (electric) motorcycles will later be certified by the Ministry of Industry. Later the Ministry of Energy and Mineral Resources can manage the service center for electric motorcycles and which ones have been certified,” Luhut explained during a press conference in Jakarta (03/20).
This assistance program to accelerate the adoption of battery-based electric motorized vehicles is part of the government’s efforts to boost Indonesia’s energy independence. Apart from the subsidy, the Indonesian government has built a lithium processing plant in Morowali, Central Sulawesi, with a capacity of 60,000 tons per year, one of the largest in the world.
“Currently, Indonesia is an importer of fossil fuels. Hence, scaling up the adoption of battery-based electric motorized vehicles can reduce dependence on fossil fuels and strengthen Indonesia’s trade balance. If we succeed in transforming and electrifying our transportation sector, then Indonesia can reduce the negative impact of greenhouse gas emissions which will help fulfill the Net Zero Emission commitment and provide a better quality environment for our future generations,” concluded Luhut.
