INDUSTRY.co.id – JAKARTA – The Indonesian government has announced value added tax (VAT) incentives for the purchase of four-wheeled electric vehicles and electric buses, reaffirming its commitment to accelerating the country's economic transformation and positioning Indonesia as a key player in the global electric vehicle supply chain.

The Head of the Fiscal Policy Agency (BKF) at the Ministry of Finance, Febrio Kacaribu, announced the incentive scheme at a press conference in Jakarta, emphasizing that the measure is designed to stimulate demand for electric vehicles while supporting the development of Indonesia's domestic battery and EV manufacturing industry.

"This VAT incentive is part of our comprehensive strategy to make electric vehicles more accessible to Indonesian consumers and to accelerate the transition to cleaner transportation. It also supports downstream industrialization goals tied to our nickel and battery value chain," Febrio said.

The Ministry of Industry (Kemenperin) was closely involved in the design of the incentive, ensuring alignment with the Battery Electric Vehicle (BEV) Program that aims to grow domestic EV production and develop a competitive local supply chain. The government has set ambitious targets for EV adoption as part of its broader decarbonization and industrial policy agenda.

Under the incentive scheme, qualifying four-wheeled battery electric vehicles and electric buses are eligible for VAT relief, effectively reducing the purchase price and improving affordability for both individual consumers and fleet operators. The government expects the incentive to catalyze demand and encourage further investment in local EV manufacturing capacity.

Indonesia's strategic position as the world's largest producer of nickel — a critical material for EV batteries — gives the country a natural competitive advantage in the EV supply chain. The government has been pursuing a downstream industrialization strategy to capture more value from nickel resources by developing battery manufacturing and EV assembly within the country.