The Ministry of Industry recently confirmed that it is holding marathon discussions with the Indonesian Automotive Industry Association and all car manufacturers regarding incentive measures for the automotive sector, aiming to accelerate the recovery and strengthening of the domestic automotive industry in 2026. In 2025, the industry faces pressure from domestic purchasing power and global market fluctuations, making the situation severe. The Deputy Minister of Industry stated that the discussions are not yet concluded, and the results will be announced after the Christmas holiday this year.
It is reported that the incentive measures are divided into two options, from which the government will choose one. Option 1: For internal combustion engine vehicles (ICE) priced below IDR 275 million, hybrid vehicles (Hybrid) and battery electric vehicles (BEV) priced below IDR 375 million, and commercial pickup trucks priced below IDR 275 million, a 100% exemption from the Luxury Goods Sales Tax (PPnBM).
BEV incentives are differentiated by battery type: vehicles using NMC batteries receive a 100% value-added tax (VAT) exemption, while vehicles using LFP batteries first receive a 50% incentive, then are subject to 6% VAT. Option 2: For ICE, Hybrid, BEV, and commercial pickups in the above price ranges, a 100% VAT exemption is granted; the BEV battery incentive scheme is the same as Option 1.
The Ministry of Industry recently confirmed that it is holding marathon discussions with the Indonesian Automotive Industry Association and all car manufacturers regarding incentive measures for the automotive sector, aiming to accelerate the recovery and strengthening of the domestic automotive industry in 2026. In 2025, the industry faces pressure from domestic purchasing power and global market fluctuations, making the situation severe. The Deputy Minister of Industry stated that the discussions are not yet concluded, and the results will be announced after the Christmas holiday this year.
It is reported that the incentive measures are divided into two options, from which the government will choose one. Option 1: For internal combustion engine vehicles (ICE) priced below IDR 275 million, hybrid vehicles (Hybrid) and battery electric vehicles (BEV) priced below IDR 375 million, and commercial pickup trucks priced below IDR 275 million, a 100% exemption from the Luxury Goods Sales Tax (PPnBM).
BEV incentives are differentiated by battery type: vehicles using NMC batteries receive a 100% value-added tax (VAT) exemption, while vehicles using LFP batteries first receive a 50% incentive, then are subject to 6% VAT. Option 2: For ICE, Hybrid, BEV, and commercial pickups in the above price ranges, a 100% VAT exemption is granted; the BEV battery incentive scheme is the same as Option 1.