Southeast Asia and its EV Policies: Which ones are ending?
WORDS BY ANTONINA JOSON
Over the last few years, Southeast Asia has become one of the fastest growing markets for electric vehicles( EVs). Several government programs were created to stimulate its domestic EV market and encourage EV sales growth. Each year, support for EVs such as infrastructure and the entrance of foreign EV makers become more prominent, leading Southeast Asian consumers to turn their attention to low-emission vehicles from traditional internal combustion engine( ICE) cars.
On the other hand, while Southeast Asian countries experienced exponential growth in EV usage, several countries are choosing not to renew their fiscal policies regarding EVs. Only a few of these policies( both for consumers and manufacturers) remain as some countries attempt to encourage local assembly and production within their own borders.
INDONESIA
Indonesia initially created a program with tax incentives for the sales and production of EVs in 2024. Under this incentive, manufacturers enjoyed the removal of the Luxury Good Sales Tax( PPnBM) and import duties for EVs. For buyers, they were able to purchase EVs with reduced value-added tax( VAT).
The exemption of PPnBM and import duties were applicable to imported completely built-up( CBU) EVs. Completely knocked down( CKD) vehicles were also exempt from paying PPBnM, but must comprise of 20 to 40 % local parts( TKDN).
To be eligible for these incentives, companies needed to fulfil investment criteria created by the Indonesian government. They must be in the process of building their own EV manufacturing plant in Indonesia, build a facility for ICE production with plans of transitioning to EV production partially or wholly, and / or invest in an existing EV plant for to increase its production or create new products.
For consumers, their EVs could have reduced VAT, ranging from 1 to 11 per cent, provided that their purchased EV is made of more than 40 % local parts. This 40 % rule was originally introduced in 2024 but the percentage of local
8 ISSUE 57 FEBRUARY 2026 / WWW. AFMA. ORG. AU