Should Incentives for Electric Vehicles Be Strengthened Amid the Middle East Conflict? Experts Weigh In

The government is deemed necessary to further strengthen electric vehicle incentives to reduce Indonesia’s dependence on petroleum fuels, especially amid global energy supply uncertainties stemming from the Middle East conflict. “In such conditions, reducing dependence on fuel oil becomes increasingly urgent. One step that can be taken is to strengthen incentives for purchasing electric vehicles,” said the Head of Economics at Bank Permata, Joshua Pasaribu, in his statement in Jakarta on Sunday (29/3/2026). According to him, geopolitical disruptions in the region have made the Strait of Hormuz route crucial again for the global energy market. In 2024, oil flows through the Strait of Hormuz reached around 20 million barrels per day, or about 20 percent of global oil consumption. Meanwhile, in March 2026, global oil supply was recorded to have fallen by around 8 million barrels per day due to disruptions in the Middle East, with Brent oil prices still hovering around $108 per barrel as of 27 March 2026. Joshua cited the government’s policy in 2025, which provided Government-Borne Value Added Tax (PPN Ditanggung Pemerintah) for certain four-wheeled electric cars with a minimum local content of 40 percent until December 2025. “That policy is considered effective in encouraging the formation of the electric vehicle market while accelerating the development of the industrial ecosystem,” he said. Joshua assessed that incentives play a significant role in accelerating the transition from fuel-based vehicles to electric ones, especially in the early stages when vehicle prices remain a major barrier for consumers. “Amid a national automotive market contraction of around 10 percent, electric vehicle sales throughout 2025 actually increased. This shows that incentives are effective in accelerating market formation,” he stated.