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

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

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

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

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

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

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

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