Tug of War on Presidential Regulation for Electric Car among Ministers

Writer: Ameidyo Daud

Editor: Hari Widowati

5/8/2019, 16.56 WIB

Oversupply of hybrid and plug-in hybrid cars owned by automotive manufacturers seems to hamper the release of presidential regulation for electric cars.

Telaah Perpres Mobil Listrik
Illustration of power charging for three electric cars.

There was a tough discussion about electric car legal umbrella, even though the Finance Minister Sri Mulyani once said the issuance of the presidential regulation (Perpres) for electric vehicles would take place before August.

Disagreements among the related ministers led to a tug of war on the discussion of the regulation. The Energy and Mineral Resources Minister Ignasius Jonan said the discussion was tough because of the debate among the ministers, but he did not specify the ministers in question. “The ministerial debate is not over yet. Some want to support it, while others do not want to support it. So, this should be resolved,” he said.

The regulation will in fact regulate electric car incentives and is expected to encourage the domestic electrification vehicle industry. It could also be followed by the issuance of Minister of Finance Regulation (PMK) regarding incentives. The reason is that the industry and the electric car market require incentives to grow.

During her visit to the 2019 Gaikindo Indonesia International Auto Show (GIIAS) exhibition last week, Sri Mulyani even said President Joko “Jokowi” Widodo would directly announce the issuance of the presidential regulation. However, there has been no sign of announcement until early August.

Jokowi also claimed that the draft regulation has not been submitted to him. “When the final draft arrive at my table, I will definitely sign it,” he said.

There was no detailed information about the presidential aides who have different opinions about electric vehicles, but Vice President Jusuf Kalla said the taxation for electric vehicle manufacturers is still being discussed. Kalla asks for an appropriate formulation of state revenue, not a reduction of state revenue. “Certainly, [it must be] balanced with other production,” Kalla said.

Regulation Issuance Retreat from May 2019

The plan to issue presidential regulation for electric cars has been delayed from the initial schedule set by the government. The Coordinating Maritime Affairs Minister Luhut Binsar Panjaitan initially targeted the issuance of the regulation to take place no later than May 2019.

To support the establishment of electric vehicle industry, the government is also preparing to set up a lithium battery industry in Morowali, Central Sulawesi. Meanwhile, PT Perusahaan Listrik Negara (PLN) will build public charging stations (SPLU).

The plan to issue presidential regulation for electric cars actually swirls around without end at the level of the technical ministries. One of the tough discussions is the luxury tax (PPnBM) incentive on electric vehicles that can reach zero percent. However, the calculation is based on exhaust emissions emitted by the vehicles.

The Taxation Directorate General also still awaits the concept of providing incentives, which is being discussed with other ministries. Moreover, the government has previously provided incentives to Low Cost Green Car (LCGC).

“The matter that is being discussed is the input from the Industry Ministry,” Director of Tax Regulation at the Taxation Directorate General Arif Yanuar said, as quoted by Bisnis.com.

Meanwhile, the Industry Minister Airlangga Hartarto said the discussion on luxury tax for electric cars had been discussed with the House of Representatives (DPR). Based on the decision, this tax incentive is only given to vehicles with an engine capacity below 3,000 cc. "So, the luxury tax for engine capacity above 3,000 cc remains high,” he said, as quoted by Kompas.com.

Airlangga had also stated that two government regulations would regulate the development of electric cars. First, the regulation regarding the acceleration of electric-based vehicles. Second, the application of luxury tax for electric-based industries, which includes hybrid vehicles.

Oversupply of Hybrid Cars

The local automotive industry also admits the complexity of the discussion regarding electric cars. An executive in the Indonesian automotive industry said the problem of developing electric cars arises when many manufacturers experience an oversupply of hybrid cars and plug-in hybrid electric vehicles. These phases complicate the direct development of electric cars.

“Moreover, our automotive industry is very Japanese minded [oriented towards Japanese brands],” the source who requested anonymity told Katadata.co.id.

Big manufacturer Toyota Motor Corp will indeed invest US$ 2 billion (equivalent to Rp 28.3 trillion) to develop electric cars in the next four years. Airlangga had stated that the investment is also targeting Indonesia, especially for the development of hybrid cars.

“This is Toyota’s next investment plan related to the new government policy,” Airlangga said after a one-on-one meeting with Toyota boss Akio Toyoda last April. At least in 2025, Airlangga expects the electric cars and low emission vehicles to reach one fifth of Indonesia’s vehicle production.

Besides Toyota, the South Korean car manufacturer Hyundai Motor Co also plans to build an electric car production base in Indonesia in 2021. Most of the production capacity will be used for export markets in Southeast Asia and Australia, while the rest is to meet domestic needs.

Toyota mobil listrik
Toyota’s electric car (Ajeng Dinar Ulfiana | KATADATA)


The Association of Indonesian Automotive Industries (Gaikindo) claimed that they did not know the obstacles toward the issuance of presidential regulation for electric cars. According to the Gaikindo Chairman Jongkie Sugiarto, the association is still waiting for the issuance of legal umbrella for electric cars from the government. “We’ll wait,” he told Katadata.co.id on Friday (8/5).

Gaikindo did not participate in the Indonesia Electric Motor Show (IEMS) exhibition held by the Assessment and Application of Technology Agency (BPPT) on September 4-5, 2019. According to the Gaikindo Chairman Rizwan Alamsjah, the association was not aware of the exhibition. “Yes, electric cars are just one of them. We show that technology includes electricity and autonomous [cars without a driver],” Rizwan said, as quoted by Liputan6.com.

According to Gaikindo, there are still many conventional cars other than electric cars. The association recently held the 2019 GIIAS at ICE in BSD, which was followed by similar exhibitions in several cities such as Makassar and Medan. This is why Gaikindo did not participate in the 2019 IEMS.

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