The measures are aimed at accelerating the adoption of battery-powered cars in Indonesia and building a base for the production and export of such vehicles.
They include lower taxes for manufacturers and buyers of electric cars, and benefits for EV owners, such as special parking areas, the draft that’s only awaiting the president’s approval shows.
The country is vying with nearby Singapore and Thailand to become the dominant force in South-East Asia for electric cars, part of an effort to fortify the local economy and reduce reliance on imported oil.
READ MORE: Malaysian company to invest RM5b in EV project
Indonesia, one of the largest untapped markets for electric vehicles, wants EVs to constitute a quarter of its car production by 2030 as it tries to bring in more global companies.
President Joko Widodo is set to sign the new rules into force "very soon,” Finance Minister Sri Mulyani Indrawati said on Tuesday. Teten Masduki, head of the presidential special staff, declined to comment, while a presidential spokesman, Erlin Suastini, didn’t return calls.
The rules would change taxation of vehicles so they would be levied based on fuel consumption and carbon emissions instead of body type and engine size, favoring electrified vehicles.
Under current rules, a US$65,000 (RM270,000) BMW X3 sDrive sport utility vehicle carries a lower luxury tax rate than a US$58,000 (RM241,000) hybrid-powered Toyota Camry because sedans have been considered a more luxurious car type.
The new rules will also require automakers to gradually increase the amount of locally produced parts to 80% by 2029, according to the draft. Motorcycle producers would need to meet that requirement already in 2026.
A number of global carmakers have decided to commit billions dollars worth of investment even before the new rules have kicked in. Toyota, which has the biggest market share in Indonesia, has said it plans to spend US$2 billion (RM8.3bil) to build hybrid vehicle plants in the country.
Hyundai Motor Co. is set to build two plants, including an electric-vehicle unit, in Indonesia by investing US$1 billion (RM4.1bil), according to Indonesian Co-ordinating Minister for Maritime Affairs Luhut Pandjaitan.
SoftBank said this week it will invest US$2 billion in Indonesia through ride-hailing giant Grab over the next five years and plans to explore investment opportunities in the country’s electric-vehicle, battery and renewable energy sectors.
