Indonesia is pushing ahead towards becoming a leader in electric vehicles after Indonesian President Joko Widodo announced his intention to boost the growth of the country's electric vehicle (EV) industry. President Widodo was speaking at the Hannover Messe trade fair in Germany which he visited this week.
During the fair, he noted that Indonesia is open to investments and cooperation in building downstream industries, laying out the country’s ambition in becoming a leader in EVs. He added that Indonesia aims to attract more foreign investments to boost its different industries and to improve its human resource.
“We are not closing ourselves. Instead, we are very open to investment and cooperation in building downstream industry in Indonesia,” the president said in a statement.
He added that Indonesia boasts "enormous potential", reflected in the projected investment value in the country’s downstream roadmap that reaches US$545.3 billion. “Until 2040, there will be 21 commodities in the downstream roadmap projected to attract an investment of US$545.3 billion,” he said.
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President Widodo's comments come as Indonesia recently reduced the value-added tax on sales of battery based EVs from 11% to 1% in an attempt to focus on vehicles who have components that are at least 40% locally manufactured, according to Tech in Asia.
Apart from reducing taxes on EVs, the Indonesian government has also introduced a subsidy program valued at an estimated US$110 million to boost the sales and adoption of electric vehicles. Under the program, the government has set targets to sell 200,000 e-motorcycles, 35,900 electric cars, and to convert 50,000 gasoline motorcycles to electric by 2023.
The news comes as countries in Asia continue to push for more electric vehicle adoption particularly to combat pollution. According to a 2022 study by McKinsey & Company, the transport sector accounts for about 17 percent of global greenhouse gas emissions with Aia being home to 93 of the 100 most polluted cities in the world and six of the top ten countries most affected by climate risks.
The transport sector is one of the largest sources of greenhouse gas (GHG) emissions, so its progress will be pivotal for meeting the climate change challenge in Asia, it said.
In Asian countries, consumers are adopting EVs at different paces, said McKinsey. "Compared with mature markets, such as China and Japan, emerging Asia—particularly India and ASEAN—is lagging. In 2021, EVs made up less than 1 percent of new-vehicle sales in the region," it said.
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