Citroën, BYD, and GAC Aion commit to building electric vehicle (EV) factories in Indonesia, bolstered by tax incentives and a thriving nickel industry.
Indonesia is positioning itself as Southeast Asia’s premier EV production hub through strategic policies and tax incentives. The Minister of Industry of the Republic of Indonesia, Agus Gumiwang Kartasasmita, recently announced that three global EV manufacturers—France’s Citroën, China’s BYD, and GAC Aion—are set to establish manufacturing plants in the country.
These automakers will benefit from Indonesia’s exemption on import taxes and a reduced luxury goods tax of 15%. Additionally, starting in the year 2025, the government will lower taxes on hybrid vehicles by 3%, further encouraging environmentally friendly vehicle production.
“The three brands or companies will enjoy the stimulus incentives that were previously conveyed by the Coordinating Minister and the Minister of Finance, the 0% import duty, and 15% PPnBM DTP (Pajak Penjualan atas Barang Mewah Ditanggung Pemerintah/Luxury Goods Sales Tax Borne by the Government),” said Kartasasmita in a press conference on Monday, the 16th of December.
The Indonesian government’s incentives have attracted substantial investments. BYD, a leader in global EV production, and GAC Aion are both planning to establish assembly and battery manufacturing plants in Indonesia. French automaker Citroën has also expressed confidence in the nation’s market potential and is exploring investment opportunities.
“We have to develop the existing factory with new investments. Since we got the permit, we have continued to invest in supporting production, including later – if there are other Stellantis products or brands,” said the CEO of Citroën Indonesia, Tan Kim Piauw, on Friday, the 20th of December.
Central to Indonesia’s EV strategy is its downstream nickel industry. As the world’s largest holder of nickel reserves, Indonesia mandates domestic processing of the resource, essential for EV batteries. This policy has increased export revenue from US$6 billion in the year 2013 to nearly US$30 billion in the year 2022. Currently, 43 nickel smelters are operational, with more under construction, ensuring a robust supply of battery materials.
Previously, on Tuesday, the 3rd of December, Kartasasmita offered his appreciation for PT Indonesia Weda Bay Industrial Park (IWIP) regarding the plan to export nickel precursors for the electric vehicle (EV) battery industry scheduled for early 2025.
“I really appreciate and thank all levels of PT IWIP for their dedication in making the Weda Bay Industrial Area the first integrated industrial area in Indonesia that supports mineral processing and production of electric vehicle battery components,” said Kartasasmita in his statement to the press.
Kartasasmita also added, “The presence of this project is expected to strengthen the electric vehicle ecosystem and provide a positive impact on the Indonesian economy, especially in North Maluku and Central Halmahera.”