The Indonesian Government has officially issued derivative regulations regarding the exemption of import duties for completely built-up (CBU) electric cars, which are effective until December 31, 2025. These provisions are governed by Minister of Investment/Head of the Investment Coordinating Board Regulation No. 6 of 2023 concerning Guidelines and Governance for Providing Import Incentives and/or Delivery of Four-Wheeled Battery-Based Electric Vehicles in Accelerating Investment (“Regulation 6/2023“).
Article 2 paragraph (1) of Regulation 6/2023 states that business actors may be granted incentives for importing completely built-up (CBU) four-wheeled battery-based electric vehicles (BEV), with a certain amount, for a period of utilizing the 0% import duty incentive, and the luxury goods sales tax (Pajak Penjualan Barang Mewah or PPnBM) borne by the government. Furthermore, Article 2 paragraph (4) mentions that incentives may be given on the condition that there is a commitment to produce four-wheeled battery-based electric vehicles in Indonesia that meet technical specifications.
Investment criteria are also regulated by Article 2 paragraph (5) of Regulation 6/2023, which states that incentives are provided for manufacturers intending to build electric vehicle manufacturing facilities. Additionally, manufacturers who have invested in internal combustion engine (ICE) vehicles and will transition to producing battery electric vehicles (BEV), either partially or entirely, will also receive incentives.
Furthermore, Regulation 6/2023 is derived from Presidential Regulation No. 79 of 2023 (“PR 79/2023”) concerning the amendments to Presidential Regulation No. 55 of 2019 regarding the Acceleration Program for Battery Electric Vehicles (BEV) for Road Transportation. This amendment likely entails modifications or updates to the existing provisions of Presidential Regulation No. 55 of 2019 to further enhance the effectiveness and implementation of the BEV acceleration program. These changes may include adjustments to incentive schemes, targets for BEV adoption, infrastructure development plans, regulatory frameworks, or other relevant measures aimed at advancing the deployment and utilization of battery electric vehicles in road transportation in Indonesia, including amends several provisions ranging from the import of completely built-up (CBU) electric cars to the minimum local content requirement (Tingkat Komponen Dalam Negeri or TKDN) period.
Article 18 paragraph 2 of PR 79/2023, it is stated that battery-based electric vehicle (BEV) industrial companies that can accelerate the assembly process domestically within the importation period in a completely built-up (CBU) state until the end of 2025. Import quotas will be provided on the condition that manufacturers commit to producing the imported unit quantity by 2027. If the production quantity is less than the imported units, the government will impose sanctions in proportion to the incentives given to the manufacturers.
If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.
Author: Dewi Susanti