Jakarta (VNA) – Indonesia’s Ministry of Finance is planning to give tax exemption for 10 years to new investors in the electric vehicle (EV) sector, according to a government official.

The stimulus applies to investors who want to build an electric car factory in Indonesia with a minimum investment value of 5 trillion Rupiah (347.22 million USD).

The new policy announced by the director general for tax at the ministry, Suryo Utomo, in a hearing at the Indonesian Parliament on March 15. He said, for full battery electric cars, the luxurious tax remains zero percent and for hybrid cars are proposed to have a tax rate of 5 percent.

Head of the fiscal policy agency Febrio Kacaribu explained that these incentives are given by the government to boost the sales and production of electric cars in the country. Other nations that provide incentives to boost electric car sales are China, Japan, England, and Germany, he said.

Previously, the Financial Service Authority (FSA) also plans to give incentives for the purchasing and credit distributions of EV in Indonesia. The agency provided the stimulus in the form of funds to debtors that have EV plants or developing upstream industries, such as batteries, charging stations, and components that can categorized as fulfilling the provisions for the implementation of sustainable finance.

The provision of funds categorized as a government programme that exempted from the maximum credit limit if guaranteed by state-owned enterprises and local administrations or insurance financial institutions.

In 2019, President Joko Widodo signed a decree on the EV to prompt investors immediately start the industry.

Indonesia aims to become an EV hub for Asia and beyond with a target to start the production in 2022 and increase the market share to 20 percent of total car production by 2025./.