Indonesia will offer incentives to entice 200,000 people to switch to electric motorbikes as part of a push to have 10% of the population using green vehicles by next year.
(Bloomberg) — Indonesia will offer incentives to entice 200,000 people to switch to electric motorbikes as part of a push to have 10% of the population using green vehicles by next year.
Each new electric motorcycle will get 7 million rupiah ($457) in subsidies, on top of some existing tax breaks, a panel of government officials said at a press briefing on Monday. Further incentives will be given for 35,000 electric cars and 138 electric buses, they said, without providing further details.
Incentives will be given for carmakers with a production facility in Indonesia and that use at least 40% local components. South Korea’s Hyundai Motors Co. and China’s Wuling Motors Holdings Ltd. are the only carmakers that meet this requirement, Industry Minister Agus Gumiwang Kartasasmita said at the briefing.
“President Joko Widodo ordered us to match Thailand’s offer or even give more than what Thailand offers,” he said. “This is all to capture investment from EV producers.”
In Thailand, the government offers subsidies of between 70,000 baht ($2,000) to 150,000 baht per vehicle, and also grants incentives for EVs including excise, road, and import tax reductions.
The government aims to have 10% of the population using EVs by next year, Coordinating Investment and Maritime Affairs Minister Luhut Panjaitan said. “If we don’t give these incentives, investors will definitely not come to us.”
The incentives will start this month and run December.
The subsidy is meant to boost local sales of electric vehicles threefold by 2030, while also bringing in manufacturers to help President Joko Widodo realize his vision of having an end-to-end EV supply chain onshore.
Pushing Indonesia’s 275 million population to shift from combustion engines to electric cars could also reduce the fuel- subsidy burden on the state budget. This year alone, the government budgeted 336.7 trillion rupiah to keep local gasoline prices low, with each reduction in subsidies prompting widespread protests.
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