SOUTHEAST ASIA: 6 MAJOR COUNTRIES REPORT
Indonesia plans to introduce a subsidy program to encourage the purchase of EVs starting in 2023. The goal is to increase the number of EV users to 2.5 million by 2025 and reduce air pollution. The EV purchase subsidy program will be added to the list of EV policies introduced by President Joko Widodo over the past year.
Transportation Minister Boudi Karya Sumadi said the government is also considering subsidies for retrofitting internal combustion engine vehicles, but the government is carefully considering this plan because it would bring major changes to the labor-intensive auto industry. The Ministry of Transport plans to approach existing Indonesian automakers, such as South Korea’s Hyundai Motor and China’s BYD, to create an EV ecosystem for Borneo’s new capital city, he said.
The intensified EV shift is partly because Indonesia is the world’s largest producer of nickel, which is used in batteries, and the country’s intention to move to a higher value-added part of the value chain by eventually ceasing all exports of nickel raw materials.
In 2022, the government ordered all state agencies to switch to electric vehicles. It ordered PLN, the state-owned electric power company, to build more charging stations to reach its goal of 2 million electric motorcycles and 500,000 electric vehicles within four years.
The Indonesian government is working to have public transportation fully electrified within five years. According to data from the Ministry of Transportation, 22,942 electric motorcycles and 4,904 electric cars were in use in Indonesia as of Oct. 3, 2022.
Source: kamobs.com
PSR Analysis: Indonesia’s EV policy is being pursued quite aggressively. The EV penetration rate is still at a low level, but with the support of these policies, it has the potential to take off in the next few years. With urban congestion and the resulting air pollution at very high levels, it will be important to see how the market reacts to these policies. The test will be whether EVs can overcome these problems, which have not been solved by other policies so far. I think it will be very difficult to achieve the goal, but in any case, EVs will not remain at the current level and will continue to spread. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
