automotive

The Incentives For The Automotive Industry Are Set To Be Announced Next Week

Coordinating Minister for Economic Affairs Airlangga Hartarto announced that the government will unveil several fiscal policies, including those pertaining to the automotive industry, next week.

This announcement will also encompass decisions regarding the increase of the Value Added Tax (VAT) to 12 percent and the provision of incentives for business operators in 2025.

"This year, we have the Luxury Goods Tax (LGT) for the automotive sector, as well as the VAT exemption for housing. We are currently finalizing these details, and we will announce them for the upcoming year in a week," stated Airlangga Hartarto on Tuesday evening (December 3).

He also indicated that new incentives will be introduced for labor-intensive industries, along with adjustments to incentives related to machinery revitalization.

Airlangga asserted that these incentives aim to enhance the competitiveness of established players in the national labor-intensive industry, ensuring they do not fall behind new entrants supported by foreign investments.

"The labor-intensive sectors, such as footwear, furniture, and garments, have seen a significant influx of new players, many of whom are backed by foreign capital," he explained.

The forthcoming incentives will primarily focus on strengthening the business sector. However, there is also the possibility of additional incentives aimed at boosting public purchasing power, aside from social assistance programs.

"Public purchasing power is already supported by social assistance. Therefore, we will reassess whether further incentives are necessary," he remarked, as quoted by Antara.

Previously, signals regarding incentives for the automotive industry were included in the Regulation of the Minister of Investment and Downstream Industry or the Head of BKPM Number 1 of 2024, which outlines the Guidelines and Governance for the Provision of Import Incentives and/or the Delivery of Battery-Based Electric Motor Vehicles for Accelerating Investment.

This regulation revises the earlier Regulation of the Minister of Investment and Downstream Industry or the Head of BKPM Number 6 of 2023, which bears the same title. The new provisions offer relief for the importation of electric vehicles and Completely Knocked Down (CKD) units in Indonesia.

Tag: Airlangga Hartarto Luxury Goods Tax Minister For Economic Affairs