Indonesia's Automotive Sector Pushes for Continued Government Support

Industry Challenges and Incentive Needs

The Indonesian Ministry of Industry is advocating for continued government incentives for the automotive sector to maintain production levels and prevent layoffs. Despite a significant increase in electric vehicle (EV) sales, with 69,146 units sold in 2025, the majority (73%) of these vehicles are imported, limiting the positive impact on the local economy.

Sales Growth and Import Dependency

The EV market has seen substantial growth in the October-January 2025 period compared to the same period last year. However, this growth has primarily benefited foreign manufacturers as most of these vehicles are imported. The local industry argues that without proper incentives, maintaining investment and employment in the sector will be challenging.

Government Considerations and Industry Demands

The Coordinating Minister for Economic Affairs, Airlangga Hartarto, previously stated that the automotive industry might not receive special incentives as it is considered robust enough. However, the Ministry of Industry counters that continued support is essential for maintaining the industry's ecosystem from upstream to downstream processes.

Economic Implications

The debate highlights the complex balance between supporting industrial growth and managing fiscal incentives. The Ministry of Industry emphasizes that targeted incentives could help maintain production capacity, protect existing investments, and enhance the competitiveness of locally produced vehicles.