EV Incentives Could Become a New Option to Reduce BBM Burden and Subsidies
Minister of Industry (Menperin) Agus Gumiwang Kartasasmita stated that the government is considering providing incentives for electric vehicles (EVs) to reduce the use of fuel oil (BBM) and the burden of energy subsidies. This was discussed in a cross-agency meeting at the Ministry of Finance in Jakarta on Tuesday (5/5/2026).
The meeting addressed various schemes for stimulus and incentives to promote industrial growth while maintaining economic resilience amid global pressures. EV policies are now positioned as instruments for controlling national energy consumption.
“We have discussed, among other things, incentives as stimulus. If the government provides incentives for electric motorbikes or cars, this becomes even more relevant, especially when we learn from past lessons. Previously, we introduced policies focused on promoting electric vehicles to reduce emissions. Now, there’s something more important: reducing BBM usage, which means reducing subsidies,” said Agus in Jakarta on Tuesday (5/5/2026).
He explained that the direction of EV policies is no longer solely based on environmental issues. The government is now placing them as instruments for controlling energy consumption and fiscal efficiency.
These incentives are also aimed at strengthening the national industry and maintaining employment absorption. The government views the manufacturing sector as the main pillar of economic growth. “Its contribution to GDP has been increasing year by year, and last year’s manufacturing growth was recorded above the national economic growth, which hasn’t happened in the previous 14 years. This shows that the manufacturing sector is the most important for the economy,” said Agus.
In the meeting, the government analysed various challenges faced by industry players in the field. The results will serve as the basis for formulating more targeted stimulus and incentive policies.
Agus also highlighted the dominance of the manufacturing sector in national exports. Data shows that 75 to 80 per cent of Indonesia’s exports come from manufactured products. However, the output structure is still dominated by the domestic market. Around 80 per cent of production is absorbed domestically and about 20 per cent enters export markets.
“Our manufacturing output has averaged only around 20 per cent exported so far. Eighty per cent consists of products absorbed domestically. We must be open without reducing and while still paying attention to and protecting the domestic market,” he said.
Agus mentioned the shift in global market direction towards electric vehicles, following increased energy risks due to geopolitical dynamics. “Yes, we have the data, so the data I received from Gaikindo friends says that since the Hormuz war occurred, the market orientation has switched to more electric-oriented,” he stated.
The Minister of Industry also noted potential pressures on the automotive, textile, and plastics sectors in the short term. Global conditions are seen to affect demand and raw material supply. Agus assessed that these pressures are temporary, and the national industry has experience in facing major crises. The government is preparing policy steps to maintain stability in the industrial sector.