Electric Vehicle Incentives Deemed to Trigger Fragmentation in Regional Tax Schemes
JAKARTA, KOMPAS.com - The policy of tax exemptions for electric vehicles is back in the spotlight following the Ministry of Home Affairs’ preparation of technical regulations as a follow-up to the circular on regional fiscal incentives. Amid uncertainty in global energy prices and subsidy pressures, the direction of this policy is deemed to require careful scrutiny.
The Ministry of Home Affairs Circular No. 900.1.13.1/3764/SJ, a derivative of Minister of Home Affairs Regulation No. 11 of 2026, encourages local governments to provide incentives in the form of exemptions from Motor Vehicle Tax (PKB) and Motor Vehicle Ownership Transfer Fee (BBNKB) for battery-based electric vehicles. This means that the decision to grant incentives now lies more in the hands of each region.
Head of Industrial and Transport Decarbonization at INDEF GTI, Andry Satrio Nugroho, regrets this step. He assesses that shifting responsibility from the central government to the regions could reduce policy certainty for industry players.
“If incentives are indeed considered important to accelerate vehicle electrification, the policy should remain consistent at the central level,” he told Kompas.com on Monday (27/4/2026).
From an investment perspective, this situation is also seen as risky. In the last three years, foreign investment in the electric vehicle ecosystem has reached USD 2.73 billion or approximately Rp 40 trillion. INDEF views that regulatory uncertainty could disrupt investor interest that requires long-term certainty.
Meanwhile, WRI Indonesia emphasises the importance of maintaining the momentum of electric vehicle growth domestically. Data shows that the market share of electric cars has increased significantly from 2.2 percent in 2023 to 16.9 percent in 2025.
“Amid global energy price volatility, incentives should be maintained so that demand growth does not stall,” said Senior Manager for Resilient Cities & Transport at WRI Indonesia, I Made Vikannanda.
According to WRI, a slowdown in electric vehicle adoption could potentially hinder achieving the net zero emissions target by 2060, while prolonging dependence on imported fuel oil and the pressure of energy subsidies that have exceeded Rp 100 trillion.