New EV Rules: CBU Imports Opened, Local Content Obligations Delayed

President Joko Widodo has issued Presidential Regulation No. 79/2023, amending Presidential Regulation No. 55/2019 concerning the acceleration of the battery electric vehicle (BEV) program. One of the crucial points involves the amendment to Article 8, which regulates the minimum local content requirement (TKDN) within specific time frames. Under the latest regulations, the government has set a minimum TKDN for EVs at 40 percent until 2026. In the previous rules, the 40 percent TKDN was to be achieved by 2024, followed by a requirement of 60 percent TKDN before 2030 and mandating 80 percent local content after that.

Another significant aspect concerns incentives. Article 18 of Presidential Regulation No. 79/2023 mentions that BEV industry companies procuring completely built-up (CBU) imported vehicles can receive incentives. As stated in Article 17i, incentives encompass fiscal and non-fiscal benefits for companies providing public electric vehicle charging stations (SPKLU), electric vehicle battery swap stations (SPBKLU), and entities or residences utilizing private electrical installations.

Investment Minister Bahlil Lahadalia stated that the technical ministries have completed harmonizing the new EV regulations. Bahlil emphasized that import quotas for EVs will be determined and only granted to automotive manufacturers committed to investing in the country. For instance, he mentioned that if a foreign brand intends to enter Indonesia, there must be a commitment to the production capacity to be built. Only after this commitment will the government allocate import quotas. "If they build a new factory at 20 percent, we will allocate a 20 percent quota," he said on Dec 11.