Indonesia To Provide incentives For New Hybrid Cars
Hybrid vehicle incentives show the move to keep German and Japanese car manufacturers operating factories in ASEAN
Indonesia is planning to roll out incentives for cars with hybrid engines (like the new Toyota Prius), said Indonesian Coordinating Minister for Economic Affairs Airlangga Hartarto recently.
Speaking at the 2024 GAIKINDO Indonesia International Auto Show (GIIAS) automotive exhibition in Tangerang, Banten, on July 24, Hartarto said that the Indonesian government is preparing incentive programmes.
Currently, hybrid cars are subject to a sales tax on luxury goods (PPnBM) of 6 to 12 percent. This contrasts with fully electric cars (battery electric vehicles/BEVs), which benefit from various incentives, including zero PPnBM.
The government is offering a government-borne 10 percent value-added tax (VAT) for electric cars that meet a minimum domestic component level (TKDN) of 40 percent.
During the opening of GIIAS on July 18, Industry Minister Agus Gumiwang Kartasasmita said that his ministry will propose incentives for hybrid vehicles to the relevant ministries.
“Every day, we try to calculate incentives and discuss them with the government internally; we will propose them, especially for hybrid vehicles, to the relevant ministries, in this case, the Ministry of Finance,” he said.
Some time ago, Kartasasmita said that the government-borne luxury goods sales tax (PPnBM DTP) incentive could be a solution to tackle car market stagnation and thereby encourage sales.
He said that such fiscal incentives succeeded in increasing domestic vehicle sales by 113 percent in the March–December 2021 period and boosted sales by 95,000 in January to May 2022.
According to Kartasasmita, incentives will be provided to vehicles meeting certain local content requirements and prioritize types of low-carbon emission vehicles.
Apart from that, support related to controlling interest rates could also increase sales of new four-wheeled vehicles, considering that in the last 10 years, annual domestic car sales have been stagnant at 1 million units.
Meanwhile, this means that Indonesian government is making sure that P.T. Toyota Astra Motor will maintain is majority market share of 30.1 percent and keep its factories running with full Indonesian employment.
Interestingly, Toyota’s other brand, Daihatsu (P.T. Astra Daihatsu) has 20.6 percent and this means that Toyota Astra has just over 50 percent market share.
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