Electric Vehicles Regulations in Indonesia: A General Overview
Fuel-based transportation is a major contributor to pollution, environmental, and health issues in Indonesia. On the other hand, Electric Vehicles ("EV”) and Battery Electric Vehicles ("BEV”), offer a cleaner and more sustainable solution, improving air quality, also driving innovation in the local technology, engineering, and manufacturing industries.
In Indonesia, the trend towards EV is increasing significantly. As such, the Indonesian Government is optimistic that a massive population of EV will travel on the roads of Indonesia in the near future. Such optimism is evidenced by several regulations that have been enacted by the government that include the guideline, requirements, and infrastructure support to accommodate BEV utilization in Indonesia.
In this regard, the Indonesian Government has prepared a national electricity plan through President Regulation No. 22 of 2017 on National Energy General Plan (Rencana Umum Energi Nasional or “RUEN”) (“PR 22/2017”), as part of the implementing regulation, which allocates the required budget to establish the EV industry in Indonesia. In this article, we provide a general overview of EV regulations in Indonesia, particularly the: (i) Acceleration of the BEV’s Program for Road Transportation; (ii) EV Sales Tax; (iii) EV Charging Infrastructure; (iv) Conversion to BEV; (v) BEV in Industrial Company; and (vi) Concluding Remarks.
Acceleration of the BEV’s Program for Road Transportation
To expedite the utilization of EVs for transportation in Indonesia, the Indonesian Government enacted the President Regulation No. 55 of 2019 on the Acceleration of the BEV Program for Road Transportation (“PR 55/2019”).
PR 55/2019 emphasizes that BEV component companies planning to engage in the BEV industry in Indonesia must obtain the appropriate business licenses and build a manufacturing facility in Indonesia. The government will provide various fiscal and non-fiscal incentives to the companies aimed at accelerating BEV industry. PR 55/ 2019 has stipulated the minimum local content (Tingkat Komponen Dalam Negeri or “TKDN”) between 35% and 40% since 2019, periodically raised to reach the maximum local content of 80% by 2026 or 2030.
Under this regulation, the government will ease the process of installing charging stations within public areas, such as gas stations, government offices, shopping areas, and public parking spaces. The procurement of charging stations shall be carried out by the State Electricity Company/PT Perusahaan Listrik Negara (PLN), which may enter partnership with other business entities.
Furthermore, each BEV imported, manufactured, and/or assembled in Indonesia is subject to the type registration and testing. These vehicles must comply with the requirements under the relevant customs registration number. They are also subject to periodical testing by the relevant working unit in the regency/municipal government, or private entities licensed to carry out such tests.
In addition, BEVs’ battery waste must be recycled and/or managed by companies licensed to recycle or manage battery wastes, in accordance with the prevailing regulations. The Ministry of Environment and Forestry (“MoEF”) will issue a further regulation on awarding these companies’ contributions to environmental preservation.
Sales Tax for EV
Purchasing an EV or a BEV is subject to sales tax imposition. This is regulated under Government Regulation No. 73 of 2019 on the Taxable Goods Categorized as Luxury in the form of Motor Vehicles Subject to Luxury Goods Sales Tax, as amended by Government Regulation No. 74 of 2021 (“GR 73/2019”). Generally, GR 73/2019 formulates the vehicle taxes, particularly the luxury goods sales tax calculated based on the exhaust emissions of the vehicles. Hence, the amount of the tax is depending on that of emissions produced by the vehicles.
Under Article 36 of GR 73/2019, BEVs or EVs are subject to 15% of luxury goods sales tax with a 0% tax base. On the other hand, Article 36A of the regulation stipulates that EVs using hybrid plug-in technology with fuel consumption equivalent to, at least, 28 kilo-meters per litter, or CO2 emission level of up to 100 grams per kilo-meter are subject to 15% of luxury goods sales tax with 33 1/3 % tax base.
EV Charging Infrastructure
The Indonesian government also provides a regulation on EV charging infrastructure, namely Ministry of Energy and Mineral Resources (“MEMR”) Regulation No. 13 of 2020 on Provisions on Electricity Charging Infrastructure for Battery-Based EVs (“MEMR 13/2020”).
The three types of EV charging stations are:
- Private Electrical Installation;
- General EV Charging Station (Stasiun Pengisian Kendaraan Listrik Umum or “SPKLU”); and
- General EV Battery Exchange Station (Stasiun Penukaran Baterai Kendaraan Listrik Umum or “SPBKLU”).
Private Electrical Installation is a facility of BEV charging for personal use and not for resale. Thus, anybody may have a Private Electrical Installation for their personal needs. On the other hand, SPKLU is a charging station facility for public consumption. In order to set up an SPKLU, a business actor must obtain the Electricity Power Provider Business License (Izin Usaha Penyediaan Tenaga Listrik or IUPTL). Kindly be informed that any business actor planning to establish SPKLU facilities needs to set them up in more than one provinces in Indonesia.
Similarly, an SPBKLU is also a public facility that provides battery exchanges for BEVs. Please note that an IUPTL holder is not required to build its own charging stations but must hold the business license based on the prevailing laws and regulations. The first provider of BEV charging facilities is PT PLN. And the state-owned company may cooperate with other BUMNs and/or business entities to build the stations. PR 55/2019 has mentioned earlier that business actors may place SPKLU and/or SPBKLU facilities in gas stations, government offices, shopping areas, or public parking spaces.
Conversion to BEV
The Indonesian government has facilitated the conversion of gasoline-fueled motorcycles and cars into BEVs. Ministry of Transportation Regulation No. 65 of 2020 (“MoT 65/2020”) stipulates Conversion of Gasoline-fueled Motorcycles into BEVs, while Ministry of Transportation Regulation No. 15 of 2022 (“MoT 15/2022”) stipulates Conversion of Gasolinefueled Vehicles Other than Motorcycles (i.e., cars, trucks, buses) into BEVs.
Generally, both regulations are similar. The conversions must be conducted in specific workshops already approved by MoI. Once the vehicles are converted into BEVs, the workshop owners shall notify MoI for further inspections and checks, before receiving the approval that such converted vehicles fulfill the requirements based on these regulations.
BEV in Industrial Company
The Indonesian government also supports the development of BEV industry through several regulations. Ministry of Industry (“MoI”) Regulation No. 28 of 2020 on BEV in Complete and Incomplete Unravelled Condition, as amended by MoI Regulation No. 7 of 2022 (“MoI 28/2020”), stipulates that any company in BEV business must obtain the Approval Letter of the Director of General at MoI. To obtain such Approval, the business actor shall apply through the National Industrial Information System (Sistem Informasi Industri Nasional or “SIINas”).
Furthermore, MoI Regulation No. 6 of 2022 on Domestic EV Specification, Road Map Development, and Condition for Calculation of Domestic Component Value (“MoI 6/2022”) has raised the targets of the two-and-three-wheeled and four-wheeled production of domestic BEVs in Indonesia up to 12 million units and 1 million units respectively, by 2035. In addition, MoI 6/2022 provides a roadmap for the development of the EV industry and sets the minimum target for achieving the Domestic Component Level, which includes the amount of domestic content in the manufacture of main and supporting parts and the assembly.
Given the recent global energy crisis, the change from fossil fuels to EV has been increasingly inevitable. Observing various regulations above, we can see that the government has been committed to developing EV utilization in Indonesia. The implementation of strong regulations is the key to promoting clean technology in the transformation of transportation ecosystem. Further actions could include adequate support in the implementation of EV production, conversion, and incentives, as well as enthusiasm in improving the industry. Limiting the use of fuel-based vehicles and accelerating the infrastructure will also push EV development further by creating an enabling environment. In the long run, advanced development of EV and BEV industry would further reduce the cost, make EVs more competitive in the market, and drive the uptake of fully electric vehicles.
The article above was prepared by Marshall S. Situmorang (Partner) and Audria Putri (Senior Associate).