Electric Car Regulation Stumped by Protectionist Tendencies

Jakarta. For 18 months, the government has gone back and forth on an electric car regulation that is promised to accelerate the country's shift away from being dependent on imported fossil fuel. But now it seems President Joko "Jokowi" Widodo has finally put the pedal to the metal on the issue and is expected to roll out the regulation by the end of this month.
One of Jokowi's ministers has said people can blame the delay on a protectionist faction within the cabinet.
"We've been waiting for one and a half years for the presidential decree. The debate between ministers is never-ending. Some are in favor [of the regulation], some are not. This [division] simply must end," Energy and Mineral Resources Minister Ignasius Jonan said on Sunday.
He said the deadlock is rooted in a debate about the use of local components in electric cars.
"We can't wait for all the electric car components to be made here 100 percent. These lawmakers would all be retired before that happens,” the 56-year-old minister said.
Indonesia is no stranger to the practice of forcing its industries to source locally.
The government has already required smartphone makers to put a certain amount of locally made material or software in their devices to be able to sell them in the Indonesian market.
The country has also limited metal ore exports in favor of local processing.
Jonan said instead of forcing electric car manufacturers to source from local suppliers, the government should encourage the process to happen naturally by offering tax incentives for local manufacturers and suppliers.
He also said Indonesia should not lose sight of the fact that electric cars will definitely reduce the country's dependence on fossil fuel imports.
The minister stressed the fact that electric cars run on electricity generated from coal, gas, wind or solar power, all of which are available in abundance in Indonesia.
Finance Minister Sri Mulyani Indrawati said on Thursday the regulation might be issued as soon as the end of this month.
"The presidential decree is all about [regulating] the ecosystem of the electric vehicle industry. It will include many incentives [to reduce] the luxury tax [on electric vehicles]. [It will also define] the types of vehicles that can receive the incentives, based on their emission levels," Sri Mulyani said.
The minister said electric vehicles are already all the rage in countries like the United States and Japan, and also in Europe.
"We hope to turn Indonesia into a manufacturing hub for electric vehicles, not only producing for the domestic market but also for export," Sri Mulyani said.
Indonesia's first target is to develop the capacity to produce and export the number one component in electric cars: the batteries.
Tags: Keywords:Related Articles
Sri Mulyani: Indonesia’s Economy Resilient Despite US Tariffs, IMF Downgrade
Despite US tariffs and IMF downgrade, Indonesia’s economy remains resilient with strong fundamentals and proactive measures.Prabowo Likely to Send Jokowi to Pope’s Funeral
Prabowo is skipping Pope Francis' upcoming funeral due to unspecified reasons.Jokowi Privately Shows School Diplomas to Journalists to Refute Persistent Allegations
Jokowi asked that no photos be taken during the informal session, underscoring his desire to maintain personal privacy.Jokowi Hires Legal Team to Confront Accusations Over University Diploma
Jokowi is once again facing renewed online attacks despite repeated confirmations from UGM officials affirming his graduation.Prabowo Hosts Jokowi for Ramadan Dinner
Since taking office last October, Prabowo has maintained a close relationship with Jokowi.Puan Brushes Off Jokowi-PDIP Rift, Calls Ties 'Always Warm'
Puan Maharani denies tensions between PDIP and Jokowi, calling their ties "always warm" despite his ouster and political rift in 2024.Prabowo Wants Batang Industropolis to Be Indonesia's Shenzhen
Batang Industropolis became the first special economic zone (SEZ) for Prabowo to launch since assuming power last October.'I Have No Plans to Resign': Senior Minister Airlangga
Rumors are growing that President Prabowo Subianto will have his second cabinet reshuffle soon.Indonesia Points Out Cracks in G20 As Trump 2.0 Ditches Multilateralism
US' absence in the recent G20 finance meeting shows how its president Donald Trump is now ditching multilateralism, Indonesia says.Prabowo's Right-Hand Man Denies Sri Mulyani's Resignation Rumors
Rumors are circulating that Prabowo will have his second cabinet shakeup soon which will remove Finance Minister Sri Mulyani from her post.The Latest
Sri Mulyani Warns of Major Shift in Global Trade Order Amid US Tariff Hikes
Sri Mulyani noted that Indonesia’s prompt decision to engage with the US placed it in a stronger position than other countries.Vietnam's VinFast Secures Rp 1.8 Trillion Loan to Build EV Plant in Indonesia
The Subang plant is scheduled to begin production by late 2025 and will manufacture four electric car models: the VF5, VF6, VF7, and VF3.Still No Talks of Mangga Dua’s Fake Goods in US Tariff Negotiations
The US has raised concerns over the counterfeit goods trade in Jakarta's Mangga Dua, a popular shopping district in North Jakarta.Indosat Ooredoo Hutchison Promotes AI Use in Mining Sector
Indosat Ooredoo Hutchison recently hosted the Indonesia AI Day for Mining Industry in Jakarta.Indonesia Open to Foreign Payment Firms Amid US Concerns Over QRIS
At present, US financial giants such as Visa and Mastercard are available in Indonesia.Most Popular
