In order to encourage promotion, Indonesian government departments announced on Monday that the value-added tax on electric vehicles will be reduced from 11% to 1% to attract investment in domestic production.
The Coordinating Ministry for Maritime and Investment Affairs stated in a statement that the incentive policy will take effect this month and will continue until the end of the year.
The statement also said that some electric buses will also enjoy VAT discounts.
Indonesia is actively attracting investment in the production of batteries and electric vehicles to take advantage of its abundant nickel reserves. Nickel is an important raw material for battery production, which will help Indonesia develop emerging industries and promote economic growth.
Indonesian officials have been trying to attract investment from electric vehicle manufacturers such as Tesla and China’s BYD.
South Korea’s LG and Hyundai have already begun building battery and electric vehicle assembly plants in this Southeast Asian country.
Last month, Indonesia announced that it will allocate 700 billion Indonesian rupiah (approximately 466.7 million U.S. dollars) in state funds to subsidize the sales of electric motorcycles until 2024.