Taxes Handed Over to Regions, Electric Vehicle Consumers Potentially Face Double Burden
JAKARTA, KOMPAS.com — Efforts to accelerate vehicle electrification in Indonesia are potentially facing obstacles due to the government’s new policy.
INDEF Green Transition Initiative (INDEF GTI) has highlighted the issuance of Ministry of Home Affairs Regulation Number 11 of 2026, which is deemed not aligned with the national policy direction.
Head of the Center for Industry, Trade and Investment at INDEF, Andry Satrio Nugroho, views the regulation as sending mixed signals contrary to the government’s efforts to promote electric vehicles.
“The government is sending contradictory messages to the public and investors, and this will harm all parties,” Andry told Kompas.com on Monday (20/4/2026).
On the other hand, Prabowo Subianto has previously reaffirmed his commitment to accelerating vehicle electrification as a strategy to reduce dependence on rising-priced fuel oil (BBM). Even the plan for national electric sedan production has been included in the list of strategic projects.
However, this ambition requires a strong domestic market. When incentives weaken, the appeal of electric vehicles to consumers could potentially decline.
Tax Uncertainty and Investment Threats
The latest Ministry of Home Affairs regulation makes electric vehicle tax policies the authority of regional governments. This means each region could implement different schemes, thus creating uncertainty for consumers and industry players.
In fact, investments in the electric vehicle sector over the past three years have reached around Rp 44.23 trillion. INDEF estimates that if this ecosystem continues to develop, its contribution to the economy could reach Rp 225 trillion and create up to 1.9 million jobs by 2030.
According to Andry, regulatory uncertainty risks causing investors to divert their funds to other countries that are more aggressive in providing incentives, such as Vietnam.
Double Burden for Consumers
The revocation of tax incentives is seen as adding to the consumer burden. For illustration, an electric vehicle priced around Rp 400 million could be subject to a transfer fee of up to Rp 48 million at the initial purchase, plus an annual tax of around Rp 5 million.
This situation is considered ironic because electric vehicles do not produce exhaust emissions, yet they are treated the same as fuel-powered cars.
“Cleaner electric vehicles are subjected to the same burden as conventional vehicles that produce emissions,” said Andry.