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Indonesia Looks To Attract EV Producers With Zero Export Duty

Indonesia plans to offer zero export duty and exemption from value-added tax to EV manufacturers willing to establish production in the large emerging Asian economy, Bloomberg reported on Friday, citing unnamed sources with knowledge of the matter.

It was not immediately clear when or for how long those subsidies would last, Bloomberg notes.  

The new policy, still in a stage of deliberation, could be changed before it is announced, according to Bloomberg’s sources.

Indonesia is competing with other countries in the Association of Southeast Asian Nations (ASEAN) including the Philippines, Thailand, and Vietnam, to attract EV manufacturers.

Indonesia, the largest economy in the Southeast Asian bloc, looks to develop its EV production capabilities as demand grows. The government hopes to be producing 13 million electric motorcycles and 2.2 million electric cars by the end of the decade. Indonesia has a well-established metals and minerals industry, with huge nickel reserves. Nickel is a vital component of EV battery production and sourcing it locally can help cut manufacturing costs. 

Indonesia, the world’s biggest nickel miner, has been looking to develop nickel processing industries and ultimately produce batteries for EV manufacturers and is eager to attract foreign companies for those ventures.

China’s EV maker BYD, backed by Warren Buffett, signed an agreement with Indonesia in May to explore opportunities in the EV market and build a plant in Indonesia.

In March this year, BYD began construction of its first plant in Thailand, joining other carmakers such as SAIC Motor's MG and Great Wall Motor to establish a presence in Thailand.

The surge in electric vehicle sales will continue this year after a record 2022, with EVs accounting for nearly one-fifth of global car sales in 2023, the International Energy Agency (IEA) said in April this year.

The momentum of EVs taking a growing share of the global car market is set to continue in the coming years to the point of displacing 5 million barrels per day of oil, the IEA said in its annual report Global EV Outlook 2023.

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By Charles Kennedy for Oilprice.com

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