Government Prepares Incentives for Toyota's Bioethanol Investment

The government, through the Ministry of Investment and Downstreaming/Investment Coordinating Board (BKPM), has assured incentives for the Toyota Group regarding plans to build a bioethanol factory in Lampung. Deputy Minister of Investment and Downstreaming, Todotua Pasaribu, stated that the incentives include general facilities for investors, such as master lists and tax holidays. This was conveyed by Todotua Pasaribu following a meeting with Toyota Asia CEO, Masahiko Maeda, at the BKPM office on Monday (20/4/2026). “The definite incentives, first for all investments in Indonesia, we indeed provide incentives in the form of master lists and tax holidays,” said Todotua. He added that the government will also implement similar policies for the B40–B50 biofuel programme to encourage bioethanol market penetration. The construction of the bioethanol factory in Lampung is targeted to begin in the third quarter of 2026 or at the latest in the fourth quarter of 2026. The factory is projected to start operating in 2028. In the initial phase, the factory’s production capacity is estimated to reach 60,000 kilolitres per year. Currently, the total national ethanol production capacity is around 120,000 kilolitres per year, with an effective capacity of about 80,000 kilolitres. Todotua emphasised that accelerating this project is crucial to support the implementation of the mandatory E10 in 2028. “This project must be started seriously because 2028 at the latest is a very fast timeline. And building a plant takes time, so this year we must already do it,” he said. He also viewed the collaboration with Japan, particularly Toyota, as a strategic step given the company’s strength in the global automotive industry ecosystem and the development of alternative energy technology. From a technological perspective, Toyota is considered capable of supporting widespread ethanol use in the automotive sector. In the future, the public will have more fuel options along with market price developments outside of subsidy schemes. Meanwhile, Masahiko Maeda expressed Toyota’s readiness to support the Indonesian government’s policies in developing new energy-based vehicles. “In the end, together with the Indonesian government, we are ready to provide various types of vehicles that we have. That is our commitment,” he added. For information, bioethanol can be produced from various raw materials such as sugarcane, cassava, sorghum, and aren. This project also includes the development of sorghum land as an additional raw material source. In its implementation, this project will be carried out through a consortium scheme. Pertamina New & Renewable Energy will partner with Toyota Tsusho as a strategic partner. The project also receives financing support from Danantara and technological support from Research Development for Bioethanol (RABID), backed by the Ministry of Economy, Trade and Industry (METI). With the support of these incentives and collaborations, this project is expected to strengthen the national bioethanol supply while accelerating the implementation of the mandatory E10 in 2028.