KONTAN.CO.ID - JAKARTA. President Joko “Jokowi” Widodo announced on Monday fiscal incentives for the development of electric cars by lowering the luxury goods tax (PPnBM), while Industry Minister Airlangga Hartarto said the government would cut to zero the import duty for electric vehicles.

Finance Minister Sri Mulyani Indrawati, meanwhile, explained that the government was preparing a presidential regulation that would provide incentives to support certain industrial activities, such as battery production and the construction of charging stations.

“The draft of the regulation is already formulated, but we need to consult with the House of Representatives as mandated by the value-added tax [VAT] law,” said Sri Mulyani after a Cabinet meeting in Jakarta on Monday.

Airlangga said the regulation would detail which businesses were eligible for such incentives. 

“The initial step has to be the introduction of a zero percent import duty for electric vehicles,” Airlangga added.

The issuance of the regulation was long awaited, said Airlangga, as BMW and Volkswagen, among other international carmakers, had expressed their desire to invest in Indonesia if such a regulation was issued.

He previously said that the government expected 20 percent of the cars in Indonesia to be electric vehicles in 2025.

Jokowi said after the meeting that Indonesia’s natural resource wealth put the country in a good position to develop the industry.

“We have a chance to become a player in the electric vehicle [industry], because we have nickel, cobalt and mangan, which are key [materials] for building electric vehicle batteries,” said Jokowi.

He added that the widespread domestic usage of electric vehicles would also lessen the country’s burden from fossil fuel imports, saving around Rp 798 trillion in the process.

Editor: Herlina Kartika Dewi