Indonesia is preparing to enter the era of electric vehicles after the issuance of Presidential Regulation No. 55 of 2019 concerning the Acceleration of the Battery Electric Vehicle Program for Road Transportation which was signed by President Joko Widodo on August 8, 2019.
A number of preparations have been made by the government, ranging from preparing electricity infrastructure as the main driving force of vehicles, establishing a road map for Indonesia 4.0, to spreading the lure of incentives for automotive industry players to produce electric vehicles and batteries in the country.
In order to welcome the era of electric vehicles, the Indonesian Automotive Journalists Forum (FORWOT) and the Industry Journalists Forum (FORWIN) took the initiative to hold a series of discussions with the theme 'The Urgency of Government Policy and Incentives to Support the Electric Car Program'.
This activity was carried out in three series of media discussions and one group discussion from November to December 2020, by presenting speakers from related stakeholders such as regulators, academics, economists, industry associations, and business actors.
"From the series of activities, at least seven recommendations were produced. This recommendation is expected to become a reference for regulators and automotive industry players in preparing to enter the era of electric vehicles in Indonesia. The end goal is to stimulate public interest in switching to electric vehicles according to the government's target, "said FORWOT Chairman Indra Prabowo, Monday (14/12/2020).
Furthermore, the seven recommendations are as follows:
1.It needs collaboration between regulators and industry players
Frost & Sullivan's research revealed that 41% of vehicle users in Indonesia will switch to electric vehicles because they are aware of the environmental and public health benefits.
However, to be able to maintain and develop this interest, there are a number of challenges that must be overcome, including the relatively high price of electric cars, the absence of an electric car ecosystem, and the limited charging infrastructure.
Policies to support electric cars are also lacking, while the public does not yet have knowledge and awareness of the importance of electric cars. All of this has resulted in the low penetration of electric cars to the market.
"In an effort to build domestic market interest and demand for electric vehicles, FORWIN and FORWOT underlined that collaboration between regulators and industry players is needed," said FORWIN Chairman Sanusi.
2. One frequency of policies across government agencies and BUMN
One of the keys to the success of the electric car program in Indonesia lies in the realm of government policy.
Therefore, collaboration is needed between regulators, namely the Coordinating Ministry for Maritime Affairs and Investment, the Coordinating Ministry for Economic Affairs, the Ministry of Industry, the Ministry of Finance, the Ministry of Transportation, the Ministry of Energy and Mineral Resources, the Ministry of Environment and Forestry (KLHK), the Ministry (Kemenkes) and State-Owned Enterprises (BUMN), especially PT PLN. (Persero) and PT Pertamina (Persero) in creating electric car regulations that are in harmony and support one another.
Especially in determining the priority for the achievement of environmentally friendly vehicles to reduce carbon emissions from the transportation sector, the efficiency of fuel consumption and noise pollution caused by the transportation sector.
3. Tax incentives for industry and consumers
The high price of electric vehicles discourages public interest in buying electric cars. This condition was admitted by Taufiek Bawazier, Director General of Metal, Machinery, Transportation Equipment and Electronics (ILMATE) Ministry of Industry in one of the discussion series.
To increase public interest, the Ministry of Industry has proposed a number of fiscal incentives to the Ministry of Finance, ranging from discounts on income tax (PPh) for electric car manufacturers, to reduced import duties for components still being imported. Meanwhile, for consumers, the Ministry of Industry also proposes giving a 0% tax discount for the purchase of electric cars. However, until now this proposal has not been approved.
According to the Director of the Institute for Development of Economics and Finance (INDEF) Program Esther Sri Astuti, incentives are needed because the Covid-19 pandemic has suppressed the productivity of industry players and people's purchasing power.
Pigovian taxes can be a means of correcting the market and correcting market failures. Market efficiency will not happen by itself, but it needs policies to regulate it. Government intervention is used to provide incentives and disincentives to prevent this market failure.
A similar sentiment was conveyed by Riyanto, a researcher at the LPEM Faculty of Economics and Business, University of Indonesia. He said, without incentives there would be no demand for electric cars in Indonesia. Even if there were, the numbers would be very small.
4. The transition process requires a hybrid car
To increase public interest in electric cars, an education and socialization process is needed. In its survey, Nissan Indonesia found that there are still many vehicle owners who question the safety factor of electric car batteries against shocks and flood immersion. In addition, there are still many who worry about running out of electricity while driving.
Therefore, one of the strategies in building domestic market demand for electric cars is to introduce through a transition to hybrid vehicles that use an electric motor as the sole driving force of the vehicle, as was done by Nissan through e-Power technology.
5. Ensure the readiness of supporting SMIs
FORWOT and FORWIN encourage the Government to ensure the readiness of supporting industries, especially small and medium scale (IKM) so that they can still contribute to the era of electric vehicles.
GAIKINDO noted that currently the national automotive industry's installed production capacity reaches 2.4 million units per year, while its utilization is only 54 percent or 1.3 million units per year.
With a utilization rate of 54%, GAIKINDO estimates that there will be absorption of 1.5 million workers in the upstream to downstream sectors of the automotive industry and their supporters, which are generally IKM. Therefore, policy support from the government is needed, so that the national automotive industry can absorb more workers with increased utilization.
6. Transparency of CBU import quotas for electric and hybrid cars
FORWOT and FORWIN also encourage transparency in the policy of import quotas for electric cars and hybrid CBUs from the government. So that it can provide fair opportunities for all domestic electric car players, as well as create healthy business competition and provide maximum benefits for consumers.
7. Increase public education
The automotive industry and regulators are expected to aggressively provide education to the public about electric cars from various aspects, including economic, socio-cultural, technological, health, and the environment. (hlz/hlz)