The Indonesian Ministry of Investment and Downstreaming, headed by the Investment Coordination Agency, has introduced Regulation No. 1 of 2024 to amend Regulation No. 6 of 2023. This new regulation governs the guidelines for granting incentives related to the import and/or delivery of four-wheeled battery-based electric vehicles (EVs) to accelerate investment in the country. The primary goal of this regulation is to adjust the management of incentives in alignment with technological advancements, international agreements, and the evolving investment dynamics. By doing so, the regulation provides a new foundation for the governance of incentives for battery-based EVs in Indonesia.

Aligning Incentives with Technological and Global Trends

The regulation aims to foster a competitive investment environment in the rapidly growing electric vehicle sector. As the world shifts toward more sustainable transportation solutions, Indonesia must position itself as a key player in the global EV market. The update to the incentive regulations supports this by creating an investment-friendly ecosystem that encourages both local production and international partnerships. This approach will facilitate the implementation of international agreements related to EVs and contribute to the acceleration of locally manufactured battery-based electric vehicles.

With the shift towards electric vehicles being driven by global trends and technological innovations, it is critical that Indonesia stays ahead of the curve. These regulatory changes not only support the growth of Indonesia’s EV industry but also enhance its competitiveness in the global market. The goal is clear: to create a sustainable environment where EVs are more affordable, accessible, and widespread.

Key Points of the New Regulation

1. Incentives for Business Operators
   Regulation No. 1 of 2024 outlines key incentives for business operators in the electric vehicle sector. One of the most significant updates is the provision of a 0% import duty and/or Luxury Goods Sales Tax (PPnBM), which is to be borne by the government for the import of electric vehicles. This incentive will significantly reduce the cost of importing EVs and make them more affordable to both businesses and consumers. This is a critical step in encouraging the adoption of electric vehicles across Indonesia.
2. International Agreements and Preferential Tariffs
   Another key feature of the new regulation is the granting of incentives for imports from countries that have an international agreement with Indonesia. These agreements help facilitate trade and encourage cooperation between Indonesia and its global partners. Under this regulation, preferential tariffs can be applied based on ministerial regulations concerning import duty tariffs, which are influenced by international agreements. This ensures that Indonesia remains competitive in the global EV market and that EV manufacturers benefit from favorable import conditions.

Simplified Application Process

To ensure the smooth implementation of these incentives, the new regulation includes a clear procedure for businesses to apply for the incentives through the Online Single Submission (OSS) System. This system allows businesses to submit their applications electronically, simplifying the process and reducing bureaucratic hurdles.

The application process involves two main steps:

1. Letter of Proposal for Incentives
   Businesses must first submit a letter proposing the granting of incentives for electric vehicle imports or deliveries. This letter must outline the business’s intention to participate in the EV market and meet the required criteria for incentive eligibility.
2. Approval and Second-Stage Application
   Once the letter is approved, the business can proceed to the second stage of the application process. This stage includes submitting a letter of approval for the utilization of incentives. However, it is important to note that any changes or second-stage applications must be submitted within the specified deadlines outlined in the regulation. This ensures that businesses stay on track and meet the regulatory requirements in a timely manner.

Effective Date and Impact

Regulation No. 1 of 2024 became effective on November 27, 2024, marking an important milestone in Indonesia’s transition to a more sustainable future. With the introduction of these incentives, Indonesia is poised to become a more attractive destination for investment in the electric vehicle sector. By fostering a supportive regulatory environment and encouraging technological innovation, this regulation will help Indonesia build a robust, competitive, and sustainable EV industry.

The Indonesian government’s commitment to enhancing the EV industry is evident in the strategic amendments made in this regulation. It not only aims to support international agreements but also creates an environment that encourages local manufacturers to ramp up the production of battery-based electric vehicles. This, in turn, will help reduce the country’s carbon footprint, create jobs, and enhance the country’s global position in the automotive sector.

Conclusion: A Step Toward a Sustainable Future

In conclusion, Regulation No. 1 of 2024 plays a crucial role in accelerating the adoption of electric vehicles in Indonesia. By providing a comprehensive framework for incentives and aligning with international standards, Indonesia is positioning itself as a leader in the green automotive industry. The implementation of these incentives will attract investment, boost local production, and drive forward Indonesia’s commitment to a sustainable and eco-friendly future. As the world continues to embrace electric vehicles, Indonesia’s strategic move will contribute to the nation’s long-term growth, both economically and environmentally.

By fostering an environment conducive to EV investment, Indonesia is not just catching up with global trends—it is setting the stage for a cleaner, greener tomorrow. The future of transportation in Indonesia is electric, and Regulation No. 1 of 2024 is a significant step toward making that future a reality.