Indonesia has announced new incentives to encourage sales of locally-produced and imported electric vehicles (EVs), in a bid to boost take-up of environment-friendlier vehicles as well as attract investment to its domestic EV industry.

The detailed incentives are a follow-up to a December-announced tax incentives plan for imported EVs for manufacturers that match import numbers with domestically made EVs in coming years, Reuters reported on Wednesday.

Under new rules made public late on Tuesday, Indonesia will remove luxury tax on EVs for the 2024 fiscal year and import tax until the end of 2025.

It will also lower value-added tax to 1 percent from 11 percent for EV buyers this year, extending a tax break that had expired at the end of 2023, the report said.

The incentives are aimed at stimulating domestic demand for EVs while attracting investment by automakers, the government reportedly said.

Many EV makers have disclosed plans to launch vehicles to Indonesia since the government announced its intention to introduce incentives, said Rachmat Kaimuddin, deputy coordinating minister overseeing EV sector development.

“Hopefully these efforts can result in even more products and make them more affordable,” Rachmat reprtedly told reporters at a separate briefing.

The Indonesian government aims for 600,000 EVs to be domestically produced by 2030. That would be more than 100 times the number sold in Indonesia in the first half of 2023, according to the report.

It also aims to become an EV production hub, leveraging the country’s vast nickel reserves, an important material for EV batteries.

China’s BYD, the world’s biggest EV maker by sales volume, last month unveiled three all-battery EV models it plans sell in Indonesia.

Elsewhere, in neighbouring Malaysia and Thailand, both countries have also introduced several policies and incentives to boost EV ownership and attract investment to develop the EV industry.

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