Bob Azam, the Vice President of Toyota Motor Manufacturing Indonesia (TMMIN), has responded to the Indonesian government’s recent policy shift to phase out exemptions for Electric Vehicle (EV) taxes, specifically the Vehicle Ownership Tax (PKB) and the Vehicle Name Transfer Fee (BBNKB). Azam views this strategic adjustment as a natural progression in the nation’s journey toward fostering an independent and sustainable electrified automotive industry. He highlighted that EVs have enjoyed significant government incentives since their initial introduction to the Indonesian market, designed to accelerate adoption and build consumer confidence. However, the latest policy signals a maturation of the domestic automotive sector, indicating a move towards a more self-reliant ecosystem.
"They have already received special treatment for two years," Azam remarked during an interview in North Jakarta on Monday, April 20. This statement underscores the perception within the industry that the initial phase of EV promotion, heavily reliant on governmental support, has served its purpose.
A Maturing EV Market and Shifting Government Focus
Azam elaborated on the current state of the battery-electric vehicle (BEV) market in Indonesia, noting its nascent but discernible growth. He indicated that the government’s attention is now strategically shifting from solely incentivizing vehicle purchases to a more comprehensive approach that includes the crucial development of supporting infrastructure. This pivot is seen as a critical step in solidifying the EV ecosystem beyond just the vehicles themselves.
The robust sales figures for electric cars in Indonesia throughout 2025, as reported by the Association of Indonesian Automotive Industries (Gaikindo), provide a clear testament to this market evolution. Sales surged to an impressive 103,931 units, constituting over 12% of the national wholesale market. This represents a significant leap from the 43,188 units recorded in 2024, signifying a remarkable 141% year-on-year increase in demand.
"I’ve stated that the ecosystem is now, in terms of car sales, growing well. Now it’s time for us to think about infrastructure, like charging stations," Azam emphasized. This aligns with the government’s apparent reorientation of priorities, moving towards facilitating the practical use and accessibility of EVs.
Economic Realities and the Need for Local Revenue
Beyond the strategic shift in industrial policy, Azam also acknowledged the practical financial considerations influencing governmental decisions. He suggested that regional governments, facing their own fiscal pressures, are increasingly looking for sustainable revenue streams to fund essential public services, such as road maintenance and infrastructure development. The removal of tax exemptions for EVs could contribute to these local government budgets.
"Regional governments are also currently under financial strain. They need income to repair roads and so on," he added, pointing to a dual motivation behind the policy change: fostering industry independence and bolstering local government finances.
Towards Self-Sufficiency: Reducing Reliance on Subsidies
Addressing the potential impact of these tax changes on EV sales, Azam articulated a pragmatic view on the long-term sustainability of industry growth. He posited that an over-reliance on subsidies is not a viable strategy for sustained market development. The automotive industry, he argued, must prepare for a future where market dynamics are driven more by intrinsic value and consumer demand rather than preferential tax treatment.
"When will we become self-sufficient in selling electric cars if we are always supported by subsidies? There must be a limit. When that limit is reached is up to the government," Azam stated, underscoring the industry’s readiness to adapt to a more competitive and subsidy-independent market landscape.
The Regulatory Framework: A Detailed Look at the Policy Shift
The Indonesian government’s move to adjust EV tax policies is formally anchored in the Ministry of Home Affairs Regulation Number 11 of 2026 concerning the Basis for Imposing Vehicle Ownership Tax (PKB), Vehicle Name Transfer Fee (BBNKB), and Heavy Equipment Tax. This regulation introduces a new framework for the imposition of these taxes across all regions of Indonesia, impacting the tax treatment of vehicles.
A pivotal change within this regulation is the revision of the criteria for tax-exempt objects. Previously, electric vehicles were explicitly listed as exempt from PKB and BBNKB. However, the updated provisions remove this automatic exemption. Consequently, Battery Electric Vehicles (BEVs) are no longer automatically excluded from regional tax obligations.
Under the latest regulations, electric vehicles are not explicitly mentioned as categories for exemption from PKB and BBNKB. Article 3, paragraph (3) of the regulation outlines the specific types of vehicles that are exempt from PKB. These include:
- Railways (trains)
- Motor vehicles used solely for national defense and security purposes
- Motor vehicles belonging to embassies, consulates, foreign representative offices with reciprocal agreements, and international organizations that receive tax exemptions from the government
- Renewable energy-powered motor vehicles
- Other motor vehicles designated by regional regulations on regional taxes and levies.
This contrasts with the previous Ministry of Home Affairs Regulation No. 7 of 2025, which specifically designated renewable energy-powered vehicles—including electric, biogas, and solar-powered vehicles, as well as vehicles converted from fossil fuels to renewable energy—as exempt from PKB and BBNKB. The current regulation shifts this classification, indicating a move away from blanket exemptions for EVs.
Potential for Local Incentives and a Phased Approach
Despite the removal of automatic national exemptions, the new regulation does leave room for continued support at the regional level. Article 19 of the latest regulation stipulates that the imposition of PKB and BBNKB for battery-electric vehicles will be subject to incentives for exemption or reduction, as determined by prevailing laws and regulations.
Furthermore, for electric vehicles manufactured before 2026, including those converted from fossil fuels to electric power, incentives for exemption or reduction of PKB and/or BBNKB will still be provided. This suggests a transitional period and a potential for localized policies to continue supporting EV adoption, albeit within a more structured and potentially less universally applied framework. This approach allows regional governments to tailor incentives based on their specific economic conditions and development priorities, while still aligning with the national objective of fostering a self-sustaining EV industry.
The move by the Indonesian government reflects a common trajectory observed in many countries as they advance their electric mobility agendas. Initial policy interventions often focus on stimulating demand through direct subsidies and tax breaks. As the market matures, consumer awareness grows, and the industry gains traction, governments tend to recalibrate their policies to encourage greater private sector investment, develop robust charging infrastructure, and ensure a more equitable distribution of tax burdens, thereby contributing to broader economic development and fiscal sustainability. The Indonesian government’s strategy, as interpreted by industry leaders like Bob Azam, appears to be following this evolutionary path.
