Indonesia's automotive sector has proven to be a key contributor to the nation's economic growth. In anticipation of 2025, the government has introduced 15 economic policy incentives, set to take effect from January 1, 2025. One of the sectors receiving significant focus is the automotive industry, where various incentives have been designed to stimulate growth. These include government subsidies for electric vehicles (EVs), such as a 10% VAT exemption for certain four-wheeled EVs and buses with a minimum local content (TKDN) of 40%, as well as a 15% luxury tax reduction for specific EV imports. Additionally, a 3% tax incentive will be provided for hybrid vehicles, while import duties for certain EV models will be waived.
These policies aim to protect the public, support businesses—especially small and medium-sized enterprises (SMEs) and labor-intensive industries—and ensure price stability and supply, while accelerating national economic growth. GAIKINDO Secretary General Kukuh Kumara welcomed these incentives, seeing them as a positive boost for the automotive industry amid current uncertainties. He highlighted the effectiveness of previous EV incentives and expressed optimism about the new fiscal support for hybrid vehicles, which have been gaining consumer interest. An important condition for receiving these incentives is that the vehicles must be locally produced, which is expected to create a "snowball effect," driving job creation and delivering a significant impact on the national economy.
