JAKARTA: The Home Ministry has walked back a new regulation scrapping tax exemptions for electric vehicles (EVs) after a backlash, with critics saying it had undermined the country’s push for EV adoption over the past few years.
The ministry issued earlier this month Home Ministry Regulation (Permendagri) No 11/2026 on motor vehicle tax, mandating EVs as taxable regional assets, and therefore, a subject for local taxation.
The regulation was welcomed by regional heads including West Java governor Dedi Mulyadi and Jakarta governor Pramono Anung, saying that they would implement the taxation immediately.
Amid greatly reduced central government transfers to regions, local administrations have been scrambling to create new sources of income, including by levying new local taxes.
Car manufacturers and consumers, along with economists, have been puzzled by the sudden emergence of the regulation, describing it as inconsistent with the national programme that started under former president Joko “Jokowi” Widodo to push the energy transition and support the growth of an EV battery industry in Indonesia.
Indonesia began promoting electrification in 2019, aiming to position itself as a global EV hub by leveraging its vast nickel reserves, supported by a range of tax incentives to attract investment and accelerate domestic adoption.
The latest ministerial regulation would have been the final blow to the remaining support for the EV push initiated by Jokowi.
This lack of support contradicts the market, which has shown signs of taking off.
Data from the Association of Indonesian Automotive Industries showed that EV sales rose 95.9% in the first quarter of financial year 2026 (1Q26) to reach 33,150 units, compared with the same period last year.
The surge lifted the EV market share to around 15.9%, with total sales of 209,021 units, up sharply from 8.2%, 205,539 units, in 1Q25. Hybrid EVs’ share also rose from 6.8% to 8.1% over the same period. — The Jakarta Post/ANN
